Microsoft has announced it will cut nearly 4% of its global workforce, equating to roughly 9,000 jobs, as it looks to manage soaring costs associated with its aggressive push into artificial intelligence. This follows a prior round of layoffs in May that affected around 6,000 employees. The cuts are part of broader restructuring efforts aimed at improving efficiency amid growing financial commitments to AI infrastructure, which is straining the company’s profit margins.
The company has pledged $80 billion in capital spending for fiscal year 2025, much of which is focused on expanding cloud and AI capabilities. However, this substantial investment is expected to shrink its cloud margins in the current June quarter. To offset this, Microsoft stated it will streamline its organizational structure by reducing managerial layers and simplifying products and processes across departments.
The layoffs will impact multiple divisions, including Microsoft’s gaming segment. Its Barcelona-based King division, known for producing the popular mobile game Candy Crush, will reportedly lose about 10% of its workforce—approximately 200 jobs. Although Microsoft confirmed its gaming division was affected, it emphasized that the majority of the unit remains intact.
Microsoft’s move mirrors actions taken by other tech giants facing similar pressures. Meta has reduced 5% of its underperforming staff, while Google and Amazon have also implemented widespread job cuts across various departments. All are navigating economic uncertainty while scaling AI systems that require substantial capital investment.
Overall, the tech sector continues to adjust to the new AI-driven landscape, with cost-cutting and restructuring seen as necessary steps for sustaining long-term innovation. Microsoft’s decision underscores the balancing act between technological advancement and maintaining healthy operational margins.
Source: Reuters