Uber to Lay Off 10% of Staff in Largest Cuts Since COVID, Citing Robotaxi Threat
Uber Announces Major Layoffs Amidst Robotaxi Competition
By Akash Sriram
Sept 2 (Reuters) - Uber Technologies will lay off about 3,300 employees, or 10% of staff, in its largest cuts since the COVID-19 pandemic, to better navigate the rise of robotaxis encroaching on its ride-hailing business.
Restructuring for Efficiency
The cuts will flatten management layers, reducing organizational complexity that was built during a period of rapid growth but is now proving a hurdle to decision-making, CEO Dara Khosrowshahi said in a note to employees on Wednesday.
Management Layers and Decision-Making
Unlike several tech executives, Khosrowshahi did not blame the cuts on AI even as a push to adopt the technology and the efficiencies it can unlock have driven large cuts in the industry this year, with tracking website layoffs.fyi putting the overall number at over 123,000 across nearly 390 companies.
"A leaner organization will mean clearer ownership, faster decisions, and more time spent building rather than coordinating. It will also generate savings that we intend to reinvest in growth, innovation, and the capabilities that will matter most over the coming years," Khosrowshahi said.
Stock Performance and Market Pressure
Uber shares rose nearly 2%. The stock has underperformed the S&P 500 and rival Lyft this year with a near 8% decline driven by worries about growing competition.
DoorDash, Instacart and local delivery platforms have been putting pressure on Uber Eats, forcing the company to turn to deals such as its $14.8 billion Delivery Hero acquisition to build scale and compete better.
Growing Robotaxi Competition
Tensions with Waymo and Other Rivals
Some of the concern stems from reports of growing tension between Uber and Waymo, the biggest U.S. robotaxi operator, which runs its cars through Uber's app in Austin and Atlanta.
Waymo has also been expanding into new markets without Uber, while rivals such as Tesla double down on robotaxis, feeding fears that a growing fleet of driverless cars could erode Uber's lucrative role as the middleman between vehicles and riders.
Uber's Robotaxi Strategy
To defend its position, Uber plans to put more than $10 billion into robotaxis in the coming years, backing the companies developing autonomous-driving systems and positioning itself as a go-to marketplace for driverless rides.
Changing Workforce Needs
"As AV tech and relationships grow and expand - there is a different type of employee needed to scale that business than one built around human drivers and all the cost to serve entailed with that, including management layers," said Adam Ballantyne, analyst at Uber shareholder Cambiar Investors.
Details of the Layoffs
Organizational Changes
As part of Wednesday's overhaul, Uber will reduce the number of employees positioned seven or more reporting layers below the CEO by 20% and cut the number of teams with only one or two direct reports by nearly half. It will also combine some teams and concentrate much of its staff presence around key hubs.
It will also limit fully remote roles to about 1% of staff, while maintaining its three-day office policy.
Historical Context and AI Costs
The layoffs, first reported by Bloomberg News, are Uber's largest since May 2020, when a pandemic-driven demand collapse forced it to shed 6,700 jobs, or nearly a quarter of its staff.
The company is also grappling with AI costs after employees used up their entire 2026 budget for the technology in just four months, according to media reports.
Uber had about 34,000 employees globally at the end of last year, according to its annual report.
(Reporting by Akash Sriram and Aditya Soni in Bengaluru; Editing by Devika Syamnath)