Microsoft Announces Layoffs Affecting Thousands as AI Spending Soars
Microsoft has confirmed plans to lay off nearly 4% of its global workforce, citing the need to manage costs amid heavy investments in artificial intelligence (AI). The tech giant, which employed approximately 228,000 people worldwide as of June 2024, will reduce headcount to streamline operations and improve efficiency.
This comes after the company announced in May 2025 that around 6,000 jobs would be cut. According to a recent Bloomberg report, the upcoming round of layoffs is expected to focus on sales roles, among others.
AI Investments Trigger Cost-Cutting Measures
Microsoft is allocating a staggering $80 billion in capital spending for fiscal year 2025, primarily aimed at scaling its AI infrastructure. However, these ambitious investments have begun to weigh on profit margins, especially in its high-performing cloud services segment.
The company anticipates a decline in cloud margin for the June quarter, compared to last year, due to the increased AI-related spending.
Organisational Restructuring and Role Reductions
In a bid to become more agile, Microsoft will also implement a reduction in organisational layers, including cutting back on middle management. It plans to streamline products, procedures, and job roles, according to a company statement released Wednesday.
The Seattle Times first broke the news, which was later confirmed by multiple outlets.
King Division in Barcelona Also Hit
Additionally, Microsoft’s Barcelona-based King division, known for developing the popular Candy Crush game, will lay off around 200 employees, roughly 10% of its staff, Bloomberg reported. These cuts add to the growing number of job losses in the tech and gaming industries.
Big Tech Layoffs Reflect Broader Trend
Microsoft isn’t alone in making cuts as the cost of AI innovation rises:
- Meta (Facebook parent): Announced plans to remove 5% of its lowest-performing employees.
- Google (Alphabet): Conducted multiple rounds of layoffs, impacting hundreds.
- Amazon: Cut roles in its books division, devices and services unit, and communications team.
Across Corporate America, economic uncertainty and rising operating costs are prompting companies to trim headcount and restructure operations.
Final Thoughts
Microsoft’s latest round of job cuts underscores the delicate balance between innovation and cost management. While the company is making bold bets on AI and future technology, the human cost of these investments is becoming increasingly apparent.
As the AI arms race intensifies, similar moves from other tech giants are likely to continue into 2025 and beyond.
