Amazon’s drone delivery unit hit with layoffs just as 10-year-old project finally launches
Amazon Prime Air drone
Source: Amazon
In 2013, Amazon founder Jeff Bezos appeared on CBS’ “60 Minutes” to reveal a futuristic plan his company had been secretly pursuing to deliver packages by drone in 30 minutes.
A pre-recorded demo showed an Amazon-branded “octocopter” carrying a small package off a conveyor belt and into the skies to a customer’s home, landing smoothly in the backyard, dropping off the item and then whizzing away. Bezos predicted a fleet of Amazon drones could take to the skies within five years and said, “it’s going to be a lot of fun.”
A decade later, Amazon is finally starting to launch drone deliveries in two small markets through a program called Prime Air. But just as it’s finally getting off the ground, the drone program is running squarely into a sputtering economy and CEO Andy Jassy’s widespread cost-cutting efforts.
CNBC has learned that, as part of Amazon’s plan to slash 18,000 jobs, its biggest headcount reduction in history, Prime Air is losing a significant number of employees. Sources familiar with the matter who asked not to be named for confidentiality said they learned about the Prime Air cuts on Wednesday, when two senior Amazon executives sent emails to employees notifying them that those impacted by the layoffs would be informed shortly. One person realized what was happening when they could no longer access Slack.
Staffers were let go across multiple sites, including Seattle, where Amazon is headquartered. Amazon’s drone test site in Pendleton, Oregon, was hit particularly hard, with half of the team being let go, one Prime Air employee wrote in a LinkedIn post, which he subsequently deleted.
Amazon declined to say how many Prime Air employees were laid off, and a spokesperson pointed back to Jassy’s blog post from earlier this month announcing the companywide cuts.
Jassy has resorted to trimming Amazon’s headcount, which grew massively during the Covid-19 pandemic, as he looks for ways to curtail expenses across the company. As part of his review, Jassy has zeroed in on some of Amazon’s more unproven bets, such as its Alexa, physical stores and robotics divisions. Now Prime Air is being added to the list of targets.
For Bezos, the staff reductions mark the latest setback in an ambitious project that’s been plagued with challenges.
Amazon spent years testing the drone technology in the English countryside to help Bezos realize his vision of even speedier delivery, dropping off some products without having to solely rely on gas-guzzling vehicles clogging up neighborhood roads.
However, the company scaled back its drone operations in the U.K. According to a 2021 story in Wired, Prime Air teams tasked with labeling drone footage raised concerns of managerial dysfunction.
Then in 2019, Jeff Wilke, who was Amazon’s consumer chief at the time, announced drones would be in operation “within months.” A year later, the Federal Aviation Administration gave the company approval to start trialing drone deliveries.
But doubts about the viability of the drones emerged after the Prime Air unit suffered high turnover and employees said they were pressured to reach ambitious internal targets, sometimes at the risk of safety, according to Bloomberg. Employee departures accelerated after there were multiple crashes at Prime Air’s test site in Pendleton. One incident in June 2021 sparked a 20-acre fire, Insider reported.
“No one has ever been injured or harmed as a result of these flights, and each test is done in compliance with all applicable regulations,” Av Zammit, an Amazon spokesperson, said in an e-mailed statement.
Liftoff finally appeared imminent in 2023. Prime Air head David Carbon, a former Boeing executive who Amazon brought on in 2020, told reporters at an event in November of last year that by the end of the decade, the company had a goal of delivering 500 million packages by drone annually to millions of customers in major cities like Seattle, Boston and Atlanta. Carbon showed off a drone concept Amazon could begin using in 2024 that’s smaller and quieter than its current model.
Two employees said Carbon, who replaced Prime Air co-founder Gur Kimchi, was hired to turn Prime Air into a real business with a sensible budget.
Now, as Prime Air embarks on its most high-stakes real world experiment to date, the parent company is reckoning with slowing growth and macroeconomic headwinds. Jassy said in his announcement about layoffs this month that company leaders are “prioritizing what matters most to customers and the long-term health of our businesses.”
Sources with knowledge of Prime Air said cuts in the drone delivery business were expected considering the division’s many struggles. Employees in the design, maintenance, systems engineering, flight testing and flight operations units were part of the layoffs, the sources said.
Zammit said Amazon remains committed to its delivery operations in its two initial markets — College Station, Texas, and Lockeford, California.
“We will gradually expand deliveries to more customers in those areas over time,” Zammit said. “Our team is also continuing to work on the development of our next-generation drone system.”
Drones in the neighborhood
In College Station, a city about 100 miles northwest of Houston that’s home to Texas A&M University, an Amazon drone delivery center sits just off a state highway, tucked behind a row of car dealerships. At the warehouse on site, all goods must weight five pounds or less.
Four launch and landing pads occupy the grounds, where unmanned aircrafts will be dispatched to take goods to residents in a handful of suburban neighborhoods located within a few miles of the facility.
Lockeford is a town of 3,500 people, south of Sacramento. An Amazon executive said in July that after looking at locations across the country, Amazon chose these two markets because of their demographics and topography.
Nina Rinchich is one of the residents in the College Station area who signed up to try Prime Air. About a month ago, an Amazon employee visited her home in Edelweiss Gartens, a subdivision a few miles south of Amazon’s drone facility.
Prime Air test participants were given a QR-code like tile that instructs the drone where to land.
Tyler Tesch
Rinchich said she’s always embraced new technologies and loves the idea of added convenience. She has a smart TV, an Echo speaker and smart light bulbs in her home.
“Anything that makes my life easier is a good thing,” Rinchich said.
Participation in the service requires a Prime membership. Residents also have to live within roughly four miles of the Amazon facility, and their yard has to meet certain specifications, such as being clear of power lines or trees that might obstruct the drone’s flight path. To entice potential participants, Amazon is offering them up to $100 worth of gift cards.
Once a person signs up, an Amazon employee comes out to measure their backyard. If it meets Amazon’s requirements, the customer is given a tile with a unique QR-like code that helps the drone recognize where to land. The yard should be clear when the drone approaches.
While Rinchich said she signed up “without hesitation,” not everyone in the area shares her enthusiasm.
Some residents of College Station and surrounding towns attended a “meet and greet” session in July, where Amazon displayed a Prime Air drone up close and let people register for the service.
Patrick Williams, a software engineering consultant, took his 12-year-old daughter, Monica. They live in a rural area called Foxfire, less than two miles by car from the Amazon facility. Monica Williams told CNBC that the size of the drone took her by surprise. Each one is about 6.5 feet wide and almost 4 feet tall, weighing 87 pounds. That’s with nothing on board.
Monica Williams, a College Station resident, poses with a Prime Air drone at a community event in July.
Patrick Williams
“It was maybe twice the size of me, or three times. It was huge,” Monica said. “That just makes me nervous to have something that big flying above me all of the time.”
Debates over safety, privacy
The same month as the meet and greet, College Station’s city council held a meeting with Prime Air employees in attendance.
Concerns about safety, privacy and noise were common themes among residents who spoke at the meeting. One person suggested that neighborhood homeowners’ associations consider banning drone deliveries in their communities altogether.
City Councilman Dennis Maloney asked Sean Cassidy, Prime Air’s director of safety, flight operations and regulatory affairs, how loud the drones would be.
“If I’m a neighbor and I’m nine feet away, is it going to sound like a backfire of a car?” Maloney asked.
“We kind of balk at making direct comparisons to gas powered things,” Cassidy, a former Alaska Airlines pilot, replied. “It’s a whirring noise you’d associate with an electrically powered device that happens to have a propeller attached to it. And it’s for a very short period of time.”
Prime Air drones are not expected to exceed noise levels of 58 decibels at any property line, according to an FAA environmental assessment issued in December. That’s below the threshold outlined in College Station’s daytime noise ordinance, which says noise at the property line must not exceed 63 decibels, or about as loud as an outdoor air conditioning unit, one official said at the meeting.
Amazon tried to ease residents’ fears that there will be constant drone traffic overhead. The company expects to conduct up to 25 flights per day over the area eligible for delivery, which is divided into four different zones.
“It’s a very modest, incremental start and basically that’s the whole purpose of this,” Cassidy said. “To learn through the operational lessons, through the community feedback, through getting direct feedback from our customers on how we can improve the operation.”
Regarding crashes, Cassidy said those incidents are part of the testing process. He said Amazon has high safety standards for the public trials in College Station and Lockeford.
“We sequester that to the test range with our experimental aircraft, and the reason we do that is we can wring all this stuff out before we put it in front of our customers,” he said. “Our obligation is to make sure that the first and the thousandth delivery are all safe.”
College Station residents also expressed concern about the prospect of drones harming the deer, foxes and birds that are native to the area. An FAA review of proposed Prime Air operations in College Station found they were unlikely to disturb wildlife. Amazon also assured the FAA it would monitor the flight area for birds like Bald Eagles and woodpeckers and take avoidance measures if determined to be necessary.
Tyler Tesch, a Google software engineer, registered for Prime Air shortly after moving to College Station. He said he received an email from Amazon earlier this month that required him to agree to Prime Air’s terms and conditions, including staying at least 100 feet clear of the drone or inside the home during a delivery and agreeing not to touch the drone or throw anything at it.
“We will be launching the service in phases to members of your community in the coming months,” the email stated. “As we continue to expand, we will update you when drone delivery is available for your household.”
WATCH: Tech layoffs mount
Huge swathes of cash are flowing from Japan to European tech startups as risk-averse investors favor a more mature entrepreneurial ecosystem, helping to scale the continent’s booming deep tech cluster.
While the European startup and venture capital ecosystem has long operated in the shadow of Silicon Valley, it has become fertile ground for Japanese corporates, whose domestic market is younger.
Japanese investors or venture capital funds who themselves have Japanese investors, known as limited partners, participated in European financing rounds worth more than 33 billion euros ($38 billion) since 2019 when a trade deal between the European Union and Japan came into force, according to research from venture capital fund NordicNinja and data platform Dealroom.
For the five years leading up to the EU-Japan Economic Partnership Agreement, investment totaled 5.3 billion euros.
In Europe at that time, “there was no Japanese capital other than Softbank,” Tomosaku Sohara, co-founder and managing Partner of Japan-Europe VC NordicNinja, told CNBC. NordicNinja, which has 250 million euros of assets under management, is a joint venture between Japan’s JBIC IG Partners and private equity firm BaltCap.
“Softbank was pretty active already at that moment, because they had acquired Finnish gaming company Supercell,” Sohara said, noting that the acquisition injected life into Finland’s startup ecosystem.
Now, Mitsubishi, Sanden, Yamato Holdings, and Marunouchi Innovation Partners are among those directly backing European tech, per the report, while Japan-linked venture capital firms such as NordicNinja, Byfounders, and Toyota‘s Woven Capital cut checks to startups on the continent.
There are over two times more VC-backed startups in Europe than in Japan, per capita, and 4.3 times more unicorns, per the report.
The shadow of Silicon Valley
Japan’s appetite for investing was always there, Sohara said. Its multinationals — like many — headed stateside to set up corporate venture capital arms in early 2000, in search of a slice of the action at the time when some of today’s largest companies were just being thought up in dorm rooms.
“Nobody wanted to look at Europe at that moment, but I think that after a couple of years they realized, ‘Hey, maybe the U.S. culture is totally different from the Japanese culture,’ and they began thinking, ‘Hey, maybe we need to look at another region like Europe,'” Sohara said, adding that the profile of entrepreneurs in Europe, many of whom came from large corporates at the time, was more aligned with Japan. That’s in contrast to the young founders coming from Stanford or university research and development departments, he said.
“They have experience at the corporates and also they have a mindset of entrepreneurship. Japan, unfortunately, is lacking the entrepreneurship mindset,” Sohara added, referring to Europe’s founders, many of whom came from Nokia and Skype.
The pull for founders
Japanese-linked investors have a penchant for one sector in particular: deep tech, which refers to companies building on top of scientific or engineering innovation. Deep tech and artificial intelligence accounted for 70% of deals made by such investors in Europe in 2024, echoing trends in the broader startup ecosystem as the AI, energy, and defense industries boom.
The top-funded companies with Japanese participation include the U.K.’s autonomous vehicle startup Wayve, which raised $1.05 billion in an investment round in May 2024, British quantum computing firm Quantinuum, which secured 273 million euros in January 2024, and Spanish quantum firm Multiverse Computing, which saw investors cut it a check of 189 million euros in June 2025. The rounds were backed by Softbank, Mitsui and Toshiba, respectively.
Such companies, however, typically need a lot of growth capital and industrial experience to scale successfully — two elements that Europe famously lacks.
“Investment appetite is way stronger than [in] any strategics I’ve seen here in Germany or in Europe,”
Sarah Fleischer
co-founder and CEO, Tozero
“Japanese firms — and they’re old, most of them that we’re talking about, right — they’re just sitting on a pile of money. They’ve been saving money throughout the last century, and now they’re starting to spend it, to try to grow as a large corporate and increase their footprint outside of Japan,” said Sarah Fleischer, co-founder and CEO of Germany-based battery materials recycling startup Tozero.
“You see that investment appetite is way stronger than [in] any strategics I’ve seen here in Germany or in Europe,” she added. Tozero has raised 14.5 million euros to date and counts NordicNinja, Honda and JJC among its investors.
It’s not just about the check. Japanese corporates and industrials have robust manufacturing and automotive know-how, Fleischer and Sohara noted respectively, meaning they are well positioned to plug Europe’s knowledge gaps when it comes to scaling large manufacturing projects.
Fleischer added that Japanese firms have long shored up their critical minerals supply chain and long-established trading firms, meaning they know how to secure essential components needed for the energy transition. For Tozero, this is an added plus, Fleischer said, given it’s in the business of recovering such materials from spent batteries.
In the age of political uncertainty amid choppy U.S.-China relations, Japan also acts as a good bridge to the Asian markets, Fleischer said.
A slower pace and lower risk appetite
Back in Japan, the number of entrepreneurs is “still very limited,” Sohara said, as the older generation and “great talents” wanted to work for “a Toyota and Honda or Sony,” he added, but the younger generation’s mindset is beginning to change.
Europe has also become the home to ambitious would-be founders searching for a tech ecosystem to build their companies in, Sohara said.
However, as collaboration between Europe and Japan scales, language remains a barrier as fluency in English is not widespread in Japan, he added.
For Fleischer, this also poses challenges. “There’s so much miscommunication and local translation that could ruin a partnership instantly. And there’s also some sort of cultural aspect as well, one needs to probably be aware of,” she said, adding that she recently spent weeks in Japan getting to know her investors face-to-face, “because that’s still the sentiment” there.
Decision-making can therefore be slower, the founder said, due to thorough research and preparation. “They just do their homework,” Fleischer said, noting that Japanese partners were hands-on in helping the company understand “how to build our next future commercial plant, potentially starting from Japan and then going worldwide.”
Indeed, “without the support from NN [NordicNinja] it would have been much more difficult to build the right relationships,” said Aaike van Vugt, co-founder and CEO of Dutch nanotechnology engineering firm VSParticle.
That’s in contrast to perhaps the most well-known Japanese player: Softbank. Softbank is “totally different” from traditional Japanese investor cultures, given it is driven by founder Masayoshi Son’s decisions rather than operating on a consensus basis, like most Japanese business, Sohara added.
The venture firm, known for its lofty bets on WeWork and, more recently, chip company Arm, poured huge sums of cash into tech startups amid the 2021 venture capital tech boom, which saw at least one Japanese-linked investor involved in deals worth 11.2 billion euros, per the report. Softbank stood out during this period; it was involved in 22% of deals with Japanese-linked participation in 2021.
Interest ticking up
Looking forward, Sohara and Fleischer expect greater collaboration between Europe and Japan. However, Japanese investors are expected to participate in rounds worth 3 billion euros in 2025, per the Dealroom and NordicNinja report, representing a dip from last year.
As many eyes turn to the Middle East for investment, Fleischer said that interest in Japan appears to be ticking up. Anecdotally, “people reach out to me for intros, which is fun, to meet Japanese corporate LPs,” she said, noting that this is a new development for her but that it may simply be because she has such investors now.
“I think it’s also politically driven as well in Japan, by the government, to position themselves more geopolitically smartly and make sure that the corporates or the industries grow in certain ecosystems, strengthening their positioning as a country,” she said.
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