Dropbox to cut 20% of its staff

File hosting company Dropbox announced it would cut 20% of its employees this week as it restructures around artificial intelligence. 

Dropbox CEO Drew Houston on Wednesday said the layoffs, which will affect over 500 employees, are intended to make the company more efficient as it transitions to a more flexible structure. 

“We’ve heard from many of you that our organizational structure has become overly complex, with excess layers of management slowing us down,” Mr. Houston wrote in a letter to employees. “And while I’m proud of the progress we’ve made in the last couple of years, in some parts of the business, we’re still not delivering at the level our customers deserve or performing in line with industry peers.”

Mr. Houston added that while the cuts were a difficult decision, Dropbox is in a position to dominate the file hosting space in the next few years. 

“This market is moving fast and investors are pouring hundreds of millions of dollars into this space,” Mr. Houston continued. “This both validates the opportunity we’ve been pursuing and underscores the need for even more urgency, even more aggressive investment and decisive action.”

Affected employees will receive severance, extended benefits and job placement services.  

This week’s layoffs come after a difficult year for Dropbox, which reported its lowest growth yet in the second quarter. The company has lost around 20% of its market share since the same time last year as competitors like Google Drive continue to dominate. 

Dropbox’s cuts add to layoffs in the tech industry, with Microsoft, Apple and Meta announcing significant cuts this year. According to estimates, the tech industry has lost over 130,000 jobs since the start of 2024.