Microsoft to Cut 9k Workers in Second Wave of Major Layoffs

Here's a summary of the themes from the Hacker News discussion:

The Role of AI as a Justification for Layoffs

Many commenters believe that the company is using "AI" as a convenient excuse to mask the real reasons for the layoffs, which they see as financial or strategic in nature. The article itself mentions AI spending as a backdrop for the layoffs, but many users doubt that AI is directly causing job losses, especially in non-technical roles.

• strict9: "Surprisingly no mention of AI in an article about mass layoffs at a tech company. Wonder if that line has finally had all the juice squeezed from it to explain away layoffs and outsourcing."
• strict9: "Yes. But in most messaging the layoffs are a result in productivity gains supposedly from AI. Not the same reasoning as capex costs."
• belter: "AI is the convenient scapegoat. Companies frame mass layoffs as a strategic shift toward AI to boost margins and excite investors, but in reality, it signals a deeper business crisis. Not one of these 9,000 jobs will be meaningfully replaced by AI anytime soon."
• mrtksn: "This appears to be sales and marketing layoffs. If AI is worth its salt, theoretically the sales and marketing people should be able to prompt they way into grabbing Microsoft's market."

Xbox's Strategic Difficulties and Restructuring

A significant portion of the discussion revolves around the Xbox division, with many users believing it's a struggling part of Microsoft's business. The acquisition of Activision is seen by some as a symptom of this struggle, leading to further consolidation and layoffs. There's speculation that Microsoft is pivoting away from traditional console gaming toward a more market-based approach, potentially even de-emphasizing the Xbox brand in favor of PC gaming.

• 999900000999: "I knew this was coming when Microsoft brought Activision. As ex game industry I nearly started crying at the news."
• 999900000999: "Mergers always lead to layoffs, games aren't doing great as they're not essential in an iffy economy."
• 999900000999: "Microsoft is seeing the writing on the wall and cutting internal studios. It's much cheaper to just pay 3rd parties to release on Gamepass vs having to fund an entire games development."
• 999900000999: "I don't think we even see a real "Xbox" in the future. You'll have Xbox branded living room PCs with Windows. They're working on a gaming mode that I guess optimizes Win 11 a bit."
• staticman2: "Xbox has been a declining brand for a while now."
• staticman2: "They are struggling to make the case for buying games from the Windows Store instead of Steam and they are struggling to make the case to buy an Xbox Console instead of a Sony or Nintendo Console."
• staticman2: "If we see Xbox branded PCs in the living room- that's more a sign of pivoting due to failure than anything else."
• seatac76: "Xbox has really become a sore point in the MS portfolio. Their pivot to a marketplace model where their games run everywhere is an admission that they lost the race to Sony. Block buster acquisition like Activision further have exacerbated their conundrum. What Xbox is now can be done by a much smaller number of people."
• tjpnz: ">Their pivot to a marketplace model where their games run everywhere is an admission that they lost the race to Sony. Don Mattrick has a lot to answer for. Microsoft was killing it during the seventh generation and he was able to burn everything down over a period of two days. Xbox never recovered after that."

Layoffs as a Normalization of Corporate Cost-Cutting

Several contributors expressed concern over the increasing frequency and perceived casualness of mass layoffs at highly profitable companies. They draw a contrast with past practices where layoffs were seen as a last resort, suggesting a shift in corporate priorities where employees are viewed more as costs than valuable assets. The impact on the middle class and the potential role of unions are also raised.

• idkwhattocallme: "For the most part, I'm indifferent to layoffs. Companies over hire and then course correct. It's part of the game. But for MSFT, it rubs me the wrong way. In the past 5 years, their stock has soared (150% on stock and doubled in valuation). They are insanely profitable ($82B profit). They are diverse (no existential business risk). The fact that they are unceremoniously laying off 30K of the people that helped them get there drives home it's just a paycheck, do your job, but know it can and will end when convenient for the company."
• idkwhattocallme: "I know folks will argue, low performers, but really. This "productivity apps" company hired them, onboarded them, made $82B in profit, surely they can figure out how to uplevel folks. Also how do you have a layoff every couple of months for 3 years. Thinking about the middle class in the previous generation, it was unions that effectively ensured a labor job meant a secure future. I wonder if that's the solution (again)."
• DeadFred: "Love the modern lexicon, where people losing their livelihood is just part of a 'game'."
• geodel: "Talking about stock price is in fact indication of layoffs being working not other way round. I don't think people are arguing against "job is just a paycheck" in last 5 years. In the same vein for company "employee is just a cost"."
• crmd: "I don’t remember when it became normalized for profitable companies to casually execute major layoffs. It used to be a “shameful” last resort that CEOs turned to as a last ditch effort to save a company facing bankruptcy. I suspect it’s related to the stock buyback safe harbor rule (Rule 10b-18.) Layoff announcements used to be a sign of a company in crisis, now the stock price often immediately rises, perhaps because shareholders are anticipating a short-term windfall."
• jimmydddd: "The Wall Street bros love layoffs. They think it makes a company more efficient. They don't see it at all as a problem with management, they just think it's a great idea. So the stock often goes up with a layoff announcement."
• crmd: "Earlier in my career I worked for a tech industry-famous CEO who is long retired. One of the most unconventional things he taught me was that “our highest obligation is to employees and their families. Second is to investors. Third is to the communities we operate in. Obviously don’t ever say this in a board meeting or investor conference”. And he meant it. When products got cancelled, people got reassigned. Terminations for poor performance happened but were individual cases. I’m quite sure the idea of firing people to goose the share price never even crossed his mind."
• pseudosavant: "Microsoft's most recent quarterly numbers, for those interested: - Revenue was $69.6 billion and increased 12% - Operating income was $31.7 billion and increased 17% (up 16% in constant currency) - Net income was $24.1 billion and increased 10% How can you justify needing layoffs when you made $24B in net income on $70B in revenue?? I guess $24B and a 10% YoY increase is almost failing?"

Mischaracterization of Layoff Reasons (vs. "Low Performers")

There's a strong sentiment that these mass layoffs are not about “low performers.” Citing statements attributed to Satya Nadella, users argue that these are structural or strategic shifts, not individual performance issues. They point out that if layoffs were truly about firing poor performers, it would likely be handled through individual terminations, not large-scale workforce reductions.

• runjake: "Didn't Satya or somebody state in recent months that it was a tactic to get rid of low performers? I believe Meta is doing something similar. Edit: Allegedly not. [...] “Nadella addressed the recent layoffs, clarifying that the decision was not based on individual job performance. “This is a structural change, not a reflection of how people were performing,” Nadella explained. He emphasized that Microsoft is shifting its strategic focus, with a renewed emphasis on artificial intelligence (AI), which the company views as a key driver of its long-term vision and growth."
• atomicnumber3: "Also, if it were actually about "low performers", this wouldn't be in the news. They'd just be terminated during/before perf review."
• 0cf8612b2e1e: "Eh, it can take a lot of political willpower to actually get rid of a low performer. We had an infamous case where it took two years to finally kick some deadweight to the curb. Wanted multiple years of underperforming performance reviews, I guess. Despite what some may claim about market efficiency, this is a public, wildly profitable company, not government. Unfortunately, I have never seen a layoff only remove weak people. Plenty of good gets thrown out with the bad every single time. The only signal I take from someone being laid off is that they were unlucky and probably not a total sycophant."

The Human Cost and Broader Economic Context

Some commenters highlight the human impact of layoffs, viewing them as more than just business decisions. Economic conditions, such as monetary tightening and inflation, are also mentioned as contributing factors to these corporate cutbacks, painting a picture of a broader economic slowdown affecting the tech industry.

• dragonwriter: "There's an economic slowdown without relaxing the monetary tightening (because inflation, while relatively mild, is still above target.) Further cutbacks from the level reached by the prior cutbacks due to monetary tightening when the economy was still in robust growth are to be expected, as are relatively transparent rationalizations that try to put an upbeat spin on them instead of the honest “the cost of money has gone up and the return of spending it on higher staffing levels has gone down.”"
• nyarlathotep_: "I do wonder if these trends continue (paired with the offshoring and H1B replacements they're all in on (otherwise mentioned in this thread), how this effects the local housing markets in places like, in this case, Seattle. If every third 22 year old isn't making 200K, how are you going to sustain a market of crapshacks "worth" 1M?"

Offshoring and H1Bs as Contributing Factors

A recurring theme is the perception that Microsoft is simultaneously laying off domestic workers while investing in overseas development (specifically India) and increasing its reliance on H1B visas. This is seen as a deliberate strategy to reduce labor costs and is viewed by some as predictable behavior from current leadership.

• shadowtree: "This pairs well with: 1 - Microsoft investing 3bn USD in India-based developers: [link] 2 - Microsoft having 4700 H1B filings for fiscal 2025: [link] Utterly predictable behavior by Satya Nadella."
• pratnala: "Layoffs are planned in India too."
• onlyrealcuzzo: "I will just comment that MSFT felt the need to get 1264 approvals for NEW H-1B petitions THIS year."
• amendegree: "Not to hate on immigrants… but shouldn’t H1B’s be the first on the chopping block of layoffs? Hard to imagine all those H1Bs are so unique that others already employed can’t replace them."
• darth_avocado: "So you are hating on immigrants…"
• darth_avocado: "The layoffs are mostly in the sales division as pointed out by other commentators. H1B filings most likely would not be in sales."