Dropbox, the cloud-based file hosting service, is making a strategic shift towards artificial intelligence (AI) and as a result, laying off about 500 employees, which represents 16% of the company's workforce. CEO Drew Houston cites the current rocky economy as one of the reasons, but emphasizes that the move will enable Dropbox to better develop its AI division.

In a memo to employees, Houston states that the company will consolidate its core and document workflow businesses while also making adjustments to product development teams. Although Dropbox remains profitable, these job cuts are necessary for the company's next growth stage, which involves focusing on AI and early-stage product development. Houston plans to continue hiring in these areas as they build up their AI division.

Dropbox has been gradually incorporating AI-powered features into their services, such as automatic text recognition in 2018. However, this shift towards AI development and the significant layoffs demonstrate a more serious commitment to remain at the forefront of the industry as machine intelligence is expected to reshape existing businesses and create new opportunities.