High AI Development Costs Lead Many Companies to Choose Layoffs

Artificial Intelligence (AI) technology is becoming increasingly sophisticated. However, behind this intelligence lies a tragic story, particularly for workers. The costs incurred by companies for AI development are substantial, and employees are often the ones bearing the burden.

Recently, many companies have opted to lay off employees to redirect resources towards AI investment, both for developing intelligent AI programmes and building necessary infrastructure, such as data centres. For instance, Amazon invested approximately Rp 211 trillion in Australia in mid-June 2025 to build an AI data centre. Furthermore, in early March 2026, Amazon committed US$50 billion (around Rp 840.12 trillion) to OpenAI.

Another example is Meta (the parent company of Facebook, WhatsApp, and Instagram), which has committed over US$100 billion (around Rp 1,764 trillion) to AI investment this year. Meta’s total capital expenditure for AI is expected to rise to between US$125 billion and US$145 billion (around Rp 2,205 trillion - Rp 2,557 trillion).

Amidst these high AI investment costs, employee job security is being sacrificed. Tens of thousands of employees across various technology companies have faced layoffs due to AI. In executing these layoffs, companies commonly use pretexts such as business transformation and organisational restructuring, with the underlying goal being efficiency.

There are two primary types of efficiency companies expect from AI through layoffs. First, companies terminate employees and directly replace their roles with AI to reduce production costs. Second, layoffs are conducted to help fund the company’s AI development costs.

Meta announced a 10 per cent reduction in its total workforce last April. Subsequently, on 20 May 2026, Meta officially laid off approximately 8,000 employees globally. By the end of last March, Meta’s total headcount reached 80,000; this action reduced the workforce under Mark Zuckerberg to around 72,000. Sources familiar with the company’s plans indicate that the latest layoffs primarily target engineering and product teams, with further cuts possible until the end of the year.

These layoffs are being carried out to support Meta’s ambition to become an AI leader. In an internal memo to affected employees, Meta CEO Mark Zuckerberg reminded staff that sacrifice is necessary to master AI. “However, success is not guaranteed. AI is the most important technology in our lives. The companies that lead will define the next generation,” Zuckerberg stated in the memo, which was shared on X by a New York Times reporter.

Prior to the layoffs, on 18 May, Meta restructured by transferring 7,000 employees to new AI projects to develop AI products and agents. This reduction and restructuring is part of Meta’s strategy to dominate AI, as evidenced by the fact that while headcount decreased, AI investment increased.

In early April, the prominent US tech company Oracle caused a stir by laying off 30,000 employees, reducing its global workforce by 18 per cent. Similar to Meta, Oracle’s workforce reduction was driven by the need for production cost efficiency to focus resource allocation on AI development and data centre infrastructure. In internal communications, Oracle claimed the mass layoffs were part of a restructuring to simplify operations and eliminate positions deemed no longer relevant.

Amazon, one of the world’s largest tech companies, cut 16,000 employees earlier this year amidst the AI competition, reducing its total staff by 9 per cent. This was not Amazon’s first round of layoffs in 2026; it followed a previous round of 14,000 layoffs in late October last year. Andy Jassy, the head of Amazon, previously explained the impact of AI adoption. As is a common view, Jassy suggested that workforce needs could become more efficient through AI. “As more Generative AI and agents are launched, it will change the way we work. We will need fewer people to do some jobs currently performed, and more people to do other types of jobs,” Jassy said, as quoted by CNN News.

However, labour efficiency via AI is not the only reason Amazon is laying off thousands. Amazon is currently in fierce competition with other tech giants such as Microsoft, Google, Meta, and OpenAI to develop AI and enhance its computing infrastructure.