Microsoft to slash nearly 4% of its workforce as it ramps up investment in AI

Microsoft announced on Wednesday that it will lay off nearly 4% of its global workforce as part of efforts to control expenses while making significant investment in artificial intelligence infrastructure.

With a total of around 228,000 employees as of June 2024, the company had already revealed in May that approximately 6,000 positions would be cut. According to a Bloomberg News report from last month, Microsoft was preparing to eliminate thousands of jobs, especially in its sales division.

The Windows maker had pledged $80 billion in capital spending for its fiscal year 2025. However, the soaring cost of scaling its AI infrastructure has weighed on its margins, with its June quarter cloud margin expected to shrink from last year.

Microsoft said on Wednesday it planned to reduce organizational layers with fewer managers and streamline its products, procedures and roles.

The Seattle Times first reported on the layoffs earlier on Wednesday. Separately, Bloomberg News reported Microsoft's Barcelona-based King division, which makes the Candy Crush video game, is cutting 10% of its staff, or about 200 jobs.

Microsoft confirmed to Reuters that its gaming division was impacted by the layoffs, although not the majority of the unit, but did not provide further details.

Big Tech peers, which are investing heavily in artificial intelligence, have also announced job cuts.

Facebook parent Meta earlier this year said it would trim about 5% of its "lowest performers", while Alphabet's Google has also laid off hundreds of employees in the past year.

Amazon has also cut jobs across its business segments, most recently in its books division. The company had earlier laid off employees in its devices and services unit, and communications staff.

Economic uncertainties and rising costs have triggered layoffs across sectors in Corporate America, as companies rush to streamline operations and hedge against further cost pressures.