US cloud storage giant Dropbox to close R&D operations, leave Israel

Cloud storage provider will lay off about 50 people, mostly engineers, in Tel Aviv office, as part of global cutback

Sharon Wrobel is a tech reporter for The Times of Israel.

The R&D center of Dropbox in the Azrieli Sarona Tower in Tel Aviv, May 15, 2018 (Shoshanna Solomon/Times of Israel)
The R&D center of Dropbox in the Azrieli Sarona Tower in Tel Aviv, May 15, 2018 (Shoshanna Solomon/Times of Israel)

US cloud storage giant Dropbox is closing its research and development center in Israel and is shutting down its entire operations, eight years after building its presence in the country.

The Tel Aviv-based R&D center employs about 50 people, many of them software engineers. The entire workforce in Israel will be laid off as the US tech firm downsizes globally and switches its focus to artificial intelligence-based products to boost business growth.

“Dropbox is ending employee operations in Israel, however, we will continue to provide Dropbox products and service Dropbox customers in the region,” Dropbox said in an emailed statement.

The move comes as the cloud storage provider announced late on Thursday that it would be laying off 16% of its total workforce, or 500 employees globally, citing slowing core cloud business growth, “headwinds” from the global economic downturn and a focus on investment on AI talent recruitment.

Dropbox is joining big tech players Google, Microsoft and Amazon, who have in recent months announced global cutbacks to trim their workforce and streamline operations, also affecting jobs in Israel.

In 2015, Dropbox bought CloudOn and turned the Israeli startup’s office into its first R&D center in the country. The Tel Aviv office represented the second-largest international Dropbox office after Ireland, and the US firm said in 2018 that it was an “important center” for innovation and engineering talent for the company.

The Israel team has been in charge of developing a set of Dropbox tools for enterprises, which over the past years has become one of the firm’s growth engines. Dropbox enterprise clients include companies like Adidas, the BBC and Expedia, with tens of thousands of users each.

In an email to employees, Dropbox CEO Drew Houston explained that “investments that showed promise before the downturn have more limited potential today.

“Headwinds from the economic downturn have put pressure on our customers and, in turn, on our business. As a result, some investments that used to deliver positive returns are no longer sustainable,” Houston wrote.

“The AI era of computing has finally arrived (…) our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development. We’ve been bringing in great talent in these areas over the last couple years and we’ll need even more,” he continued.

Founded in 2007 by Houston and Arash Ferdowsi and headquartered in San Francisco, Dropbox has in recent years transitioned from being just a cloud location where files are stored to providing businesses with a virtual workspace for teams to work together.

For the fourth quarter of 2022, the file sharing company reported revenue of $598.8 million, up 5.9% from the same period last year. It has more than 700 million registered users across 180 countries.

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