Microsoft to cut about four percent of jobs amid hefty AI bets

Microsoft has confirmed it will lay off nearly 4 percent of its workforce as the tech giant looks to rein in costs amid hefty investments in artificial intelligence infrastructure.

The company, which had about 228,000 employees worldwide as of June 2024, had announced layoffs in May, affecting around 6,000 workers. It was planning to cut thousands of jobs, particularly in sales, Bloomberg News reported last month.

The Windows maker had pledged US$80 billion (A$122 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 has now planned to reduce organisational layers with fewer managers and streamline its products, procedures and roles.

The Seattle Times first reported on the layoffs earlier on July 2. Separately, Bloomberg News reported Microsoft’s Barcelona-based King division, which makes the Candy Crush video game, is cutting 10 percent 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 percent 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 large corporations spanning multiple sectors in recent months as companies rush to streamline operations and hedge against financial pressures.