Microsoft and Meta announce large staff reductions as they spend big on AI

 

Microsoft and Meta announce large staff reductions as they spend big on AI

 

Meta said it would cut 10% of it employees while Microsoft will offer voluntary retirement to about 7% of workers

 

Sanya Mansoor

Thu 23 Apr 2026 23.51 BST

https://www.theguardian.com/technology/2026/apr/23/meta-microsoft-tech-ai-layoffs

 

Meta and Microsoft are trimming their workforces by thousands as they make heavy investments in AI and executives claim that the technology is meeting their companies’ productivity needs.

 

Meta told staff on Thursday that on 20 May it would cut some 10% of its personnel – just under 8,000 employees– to boost efficiency, part of a layoff plan made months ago. The company is also closing about 6,000 open roles. The same day, Microsoft announced to employees, for the first time, that it would offer voluntary retirement to about 7% of its American workforce of roughly 125,000.

 

In an internal memo to Meta’s staff, Janelle Gale, the chief people officer, didn’t mention AI explicitly but said the cuts would allow the company to “offset the other investments we’re making”. In Meta’s fourth-quarter 2025 earnings presentation, the CEO, Mark Zuckerberg, spoke about a “major AI acceleration” that included plans to spend from $115bn to $135bn on AI – nearly twice the company’s capital expenditure the previous year.

 

“This is not an easy tradeoff,” Gale wrote. She emphasized that laid-off employees would receive generous severance packages.

 

Zuckerberg, in contrast to Gale, has said outright that AI is making some hiring unnecessary. “We’re starting to see projects that used to require big teams now be accomplished by a single very talented person,” he said in the January earnings call.

 

Meta confirmed news reports of the layoffs and internal memo, but declined to comment further.

 

Microsoft wrote to its employees on Thursday that it would be offering voluntary buyouts to longtime employees, in particular those for whom the sum of their ages and years at the company amount to 70 or greater, according to the FT. More than 8,000 employees would qualify, according to the FT. Microsoft did not immediately respond to a request for comment.

 

In July 2025, Microsoft forecast that it would spend some $100bn on AI infrastructure in the coming fiscal year. Analysts now estimate that figure to be $110bn-$120bn.

 

Mustafa Suleyman, Microsoft’s AI chief, said in February that he believes that AI will be able to replace most white-collar work within the next 12 to 18 months.

 

Satya Nadella, the Microsoft CEO, has trumpeted Microsoft’s internal AI adoption, which he says has led to major productivity gains. In April 2025, he claimed that AI handled as much as 30% of the company’s coding work.

 

“We are only at the beginning phases of AI diffusion, and already Microsoft has built an AI business that is larger than some of our biggest franchises,” he said in a January press release.

 

Zuckerberg was sitting onstage with Nadella as the Microsoft CEO made the remark. When Nadella asked Zuckerberg how much of the social media company’s coding was done by AI, Zuckerberg said: “Our bet is sort of that in the next year probably … maybe half the development is going to be done by AI, as opposed to people, and then that will just kind of increase from there.”

 

The redundancy announcements from the two tech giants come amid tech workers’ growing concerns that their bosses will try to replace them with AI. Those fears aren’t unfounded.

 

Employees themselves are becoming fodder to train AI models. Reuters recently uncovered an internal memo at Meta showing that the company is installing new software on American employees’ computers to record their mouse movements, clicks and keystrokes to feed into AI training data.

 

Other companies doubling down on AI have slashed their numbers, too. The Block CEO Jack Dorsey cut almost half the company’s workforce in early March, citing gains in AI. Amazon, which announced plans to spend a whopping $200bn in one year in February, has laid off at least 30,000 workers in the last six months. Oracle, which is struggling with the debt load of its multibillion-dollar investment in datacenters, told employees last month that it would be cutting thousands of jobs, too.