So Amazon, like every other FAANG, is very bloated. I've yet to experience any sort of major layoff in the industry at large. They seem mostly isolated to these mega-corps that got PPP money, hired way too much, and are now trimming back the fat. It is sort of icing the fungibility of jobs for now but not in a way that I am at all worried about.
I think your general point is correct: FAANG over hired during the pandemic, but I'm not sure you understand how PPP worked or how the money was distributed. Google, Amazon, and Meta weren't the primary recipients of PPP money (they directly received 0 of it).
Their stock price increased due to both performance during the pandemic, and the general loose environment created by the Federal Reserve which probably played more of a role than PPP targeting mid-size businesses.
1. Your manager is the one putting you in PIP (firing plan). If you're friends with your manager, he won't put your name, even if your performance is below the bar.
2. This is applicable in every single avenue of life, but your reputation is everything. Work hard for the first few months after joining a team and impress your leadership and your colleagues on your first few tickets, then you can dial it down and still be 100% safe and be regarded as a top tier engineer. You will be "the guy that ramped us fast and executed well" for the rest of your time in that team. If you have setbacks, you won't even need to justify yourself, they will just know that "hey if this top guy is struggling it just means it's very hard".
On the contrary, I have witnessed people being fired or looked down upon just for having a bad reputation, even when they were doing just fine or had legitimate roadblocks on some tasks. One of my good friends got fired because he was the party guy of our team, so nobody was ever taking him really seriously.
I rarely have seen (1) come into play. I'm sure it happens, but there is a lot of scrutiny of the stack rank, enough where I think it would be hard to pull off. I think most friend managers would tell their friend months ahead of time -- you really need to do XYZ or things are going to be tight at review time.
(2) is very true though. Reputation and perception is super important. Although I think companies now do take a harder look at delivered impact either via KPIs or OKRs.
In my experience, most engineers are pretty good. And I've struggled to find people to put in the bottom of the stack rank, because I didn't feel that their compensation would reflect the impact they had. IMO, after having to do layoffs, it is the hardest part of the job. And it sucks because there is very little way out of it for the manager. Helping person X do better, just means that now person Y is at the bottom of the stack.
In Amazon you will be PIPed (or rather put in focus, which is a first step that may lead to PIP) if you are marked as "Least effective" which is the bottom 15%.
Your manager has to demonstrate why you are "Least Effective", and they have to demonstrate why you are "Top tier". However, they don't really have to justify themselves to put you in the middle of the pack, where you will be safe from PIP.
So, for sure, you may not be ranked in the top of the team if you're buddy with your boss, which means you won't get a salary increase for example, but at least you won't be PIPed, which in the end is what I assume most people care the most about.
Worked in a company that does stack ranking. Here's how you do 1 (in the opposite sense): Give the person tough tasks, with very tight deadlines. Amplify their failings and belittle their achievements. Repeat till the employee screws up, and start building evidence for a PIP. Get others involved (customers the employee is interacting with, your own manager, etc). In most cases I've seen, if a manager is unhappy with you, the others (customers, your manager) will follow the manager's lead to get rid of the person.
If/when the employee contests this, most HRs will pick someone from the same department to be the investigator. Since it's the same department, it means it's the same culture your manager is exhibiting. They will much more likely believe them than they will you.
Source: I got semi-fired this way. To give you an example: The investigator wanted proof for everything I was claiming in my defense. Not only that, they held it against me if I had not sent emails to my manager saying I disagreed with his behavior. Eventually, I asked the investigator: "So, did my manager show you proof for all his claims?" The investigator responded with "Good point, and once this process is over I will send him and his manager feedback on the mistakes they made." Umm - sure, but why should I be punished and not them? No answer.
I somehow stayed at the company (they made an exception for me and let me change teams) - and over years saw this process repeat over and over. When an employee is in trouble, I immediately start advising them on the steps their manager will take - it usually plays out as described above.