Early this month, Microsoft confirmed it was axing 9,000 employees, or about 4 percent of its workforce, in its third staffing cut of 2025. One might suppose a company that’s been laying people off for three years straight isn’t performing well or is under pressure from shareholders to reduce costs and return to profitability. But that’s not the case here: In April quarterly earnings, Microsoft reported $25.8 billion net income on $70.1 billion in revenue, with optimistic guidance for Q2. Analysts have since improved their forecasts, and on Wednesday, the company’s stock hit an all-time high.
Microsoft isn’t alone in cutting workers while things are going great. Since 2022, and most recently in January, Meta has been letting thousands of employees go; it, too, has been beating expectations and reporting massive profits. Google, after layoffs in 2023 and 2024, is now offering buyouts. But the Microsoft example might be the starkest. As recently as five years ago, America’s largest tech companies represented stable, lucrative, and futureproof employment. Collecting just the right qualifications might land you a role at Google or Facebook, where you’d have some of the best and broadest prospects in the entire job market, much of which was starting to look dreary in comparison. (They made an entire movie about being Google interns! Vince Vaughn and Owen Wilson were terrible in it!)
Microsoft, the oldest of the bunch, represented stability twice over: a massive organization with a foot in the future, but also a place where you’d meet people who’d worked there for 30 years. As former employee Daniel Sada writes, some employees saw an implied pact. Microsoft didn’t quite pay as much as some of its peers, but it paid fine, and in exchange, “you [got] stability, reasonable work-life balance, and most importantly, no layoffs.” Now, he says, “the pact is fundamentally broken.” At Microsoft — and across formerly safe big-tech firms — it’s been replaced with new feelings of precarity.
From outside the industry, one might see this as an inevitable regression to the American employment mean: an industry where workers were temporarily distracted from, or just mistaken about, the true nature of their relationship with their employers. Things were good, workplace organizing was unnecessary, and everyone was on the same team, until they weren’t, and it was too late. Your job was just another job. From inside the industry — and Microsoft — the transition has been sudden and jarring. After the last round of layoffs, an executive producer at Xbox, where cuts were especially deep, posted a message from light-years outside any imagined “pact”:
As he implies, the specter of AI hangs over these layoffs and others in the industry in unsettling ways. (One major wrinkle in the story of tech-employment exceptionalism is that programming might be one of the most AI-exposed job categories of all.) And while the last few years of layoffs can be understood substantially as a consequence of massive COVID-era overhiring and executive backlash, that excuse is starting to feel insufficient.
Microsoft, Google, Meta, and Amazon, all of which are still in cost-cutting mode, are major players in AI. Amazon’s CEO warned that, after it all nets out, AI deployment within the company will probably result in cuts; Meta and Google are bragging about how much code they’re already generating with AI. For now, they’re not connecting cuts with automation, but they’re getting close: Microsoft, while touting quantifiable savings and efficiency gains from AI, is also claiming that AI was “not a predominant factor” in recent layoffs. Given the types of jobs being targeted by the company — staffers in gaming, where the company is shifting focus for other reasons, and managers whose roles aren’t particularly exposed to current AI tools — this is probably true, narrowly speaking. But that doesn’t mean they aren’t connected.
Big tech may be harvesting record profits, but it’s also collectively spending hundreds of billions of dollars betting on AI (Microsoft committed to $80 billion in AI-related capital expenditures this fiscal year alone). Microsoft might not be LLMing its current employees out of their jobs today, but it’s making a massive and very public bet on its ability — and the ability of others, using its tools — to do so tomorrow. For now, maybe big tech is just looking for some extra cash for the cause.