Microsoft announced on Wednesday that it will lay off nearly 4% of its workforce, marking the latest round of job cuts as the tech giant seeks to rein in costs amidst substantial investments in artificial intelligence (AI) infrastructure.
As of June 2024, the company, which had approximately 228,000 employees worldwide, had previously announced layoffs in May affecting around 6,000 workers. Bloomberg News reported last month that Microsoft was planning to cut thousands more jobs, particularly within its sales divisions.
The Windows maker had pledged $80 billion in capital spending for its fiscal year 2025. However, the escalating cost of scaling its AI infrastructure has weighed on its profit margins, with its June quarter cloud margin anticipated to shrink compared to last year. On Wednesday, Microsoft stated its intention to reduce organizational layers by having fewer managers and to streamline its products, procedures, and roles.
The Seattle Times was the first to report on these latest layoffs earlier on Wednesday. Separately, Bloomberg News reported that Microsoft’s Barcelona-based King division, known for developing the popular “Candy Crush” video game, is cutting 10% of its staff, impacting approximately 200 jobs. Microsoft confirmed to Reuters that its gaming division was affected by the layoffs, though not the majority of the unit, but did not provide further specific details.
Other major tech companies, also heavily investing in artificial intelligence, have similarly announced job reductions. Earlier this year, Facebook parent Meta stated it would trim about 5% of its “lowest performers,” while Alphabet’s Google has laid off hundreds of employees over the past year. Amazon has also implemented job cuts across various business segments, most recently within its books division. The company had previously laid off employees in its devices and services unit and among its communications staff.
Broadly, economic uncertainties and rising costs have triggered layoffs across various sectors in Corporate America, as companies swiftly move to streamline operations and hedge against further cost pressures.
