is a senior editor and author of Notepad , who has been covering all things Microsoft, PC, and tech for over 20 years.
I can’t open LinkedIn without seeing a new post from a Microsoft employee who lost their job in the company’s latest round of layoffs. Around 15,000 jobs have been eliminated at Microsoft over the past couple months — the biggest cuts at the company in more than a decade.
I’ve spoken to more than a dozen Microsoft employees in recent weeks, and everyone is concerned about the company’s direction in this AI era. Morale is at an all-time low, and employees are worried that regular layoffs are simply the new normal.
Sources tell me that Microsoft’s leadership team had the choice between reducing investment in AI infrastructure for the upcoming financial year or deeply cutting its headcount and operating expenses. It’s very clear what route Microsoft chose.
These layoffs have been both broad and brutal. While you’ve likely read the headlines about the impact on Xbox games studios, Microsoft’s other cuts go far deeper and are part of a bigger plan to restructure Microsoft around AI tools.
Microsoft’s layoffs have also impacted roles internationally, where an AI operations manager in Portugal proved susceptible to Microsoft’s latest reductions. Some employees even discovered they had lost their job while on vacation, and one was laid off twice in around six months.
This doesn’t mean MS is necessarily reducing headcount overall, as employees like Patrick Lyons are being forced to apply for other roles. That could mean Microsoft’s headcount might actually be similar this year to 2024.
Experienced veteran employees were also cut recently. Former engineering manager HongQiao Li had spent nearly 21 years at Microsoft prototyping the early version of Copilot in Office, before the latest cuts. Trinh Tran, a senior partner technology strategist, had dedicated 23 years to Microsoft while building solutions for the company’s cloud business and championing accessibility. Business strategy expert Darron Inman joined Microsoft in 1996 and is “disappointed that I didn’t quite make it to the 30-year mark.”
Microsoft’s gaming business has been heavily impacted by the latest cull. Rare’s Everwild and The Initiative’s Perfect Dark games have been canceled, with The Initiative shutting down as a result. Blackbird, a new game from ZeniMax Online Studios, impressed Microsoft Gaming CEO Phil Spencer earlier this year, but it was canceled anyway. Blizzard is also sunsetting its Warcraft mobile game, just months after Activision wound down its Call of Duty: Warzone mobile game.
Forza Motorsport developer Turn 10 Studios was also hit hard by Microsoft’s cuts. One source described the layoffs as leaving enough people behind to keep the game up and running. It looks like Turn 10 will simply be a support studio for the Forza franchise, so I doubt we’ll see another Motorsport entry from the team.
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