Microsoft and Meta reduce workforce amid heavy investment in AI

As they make significant investments in AI, Meta and Microsoft are reducing their workforces by thousands, and CEOs assert that the technology is fulfilling their businesses’ productivity demands.

As part of a layoff plan created months ago, Meta informed employees on Thursday that it will reduce about 8,000 workers, or 10% of its workforce, on May 20 in order to increase efficiency. About 6,000 open positions are being closed by the corporation. On the same day, Microsoft made the first announcement to its workers that approximately 7% of its approximately 125,000 American employees would be eligible for voluntary retirement.

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Chief people officer Janelle Gale stated that the cuts will enable the firm to “offset the other investments we’re making” in an internal memo to Meta employees, without specifically mentioning AI. Mark Zuckerberg, the CEO of Meta, discussed a “major AI acceleration” during the company’s fourth-quarter 2025 earnings report. He mentioned plans to spend between $115 billion and $135 billion on AI, which is about twice the company’s capital spending from the prior year.

Gale wrote, “This is not an easy tradeoff.” She stressed that hefty severance compensation would be given to laid-off staff.

Unlike Gale, Zuckerberg has stated clearly that AI is eliminating the need for some hiring. During the January earnings call, he stated, “We’re starting to see projects that used to require big teams now be accomplished by a single very talented person.”

Meta declined to comment further, but it did confirm news stories about the internal message and layoffs.

According to the FT, Microsoft informed its staff on Thursday that it would be providing voluntary buyouts to long-term workers, especially those whose ages plus years with the company totaled 70 or more. The FT claims that around 8,000 workers would be eligible. A request for comment was not immediately answered by Microsoft.

Microsoft predicted in July 2025 that it will invest about $100 billion in AI infrastructure during the upcoming fiscal year. That amount is currently estimated by analysts to be between $110 billion and $120 billion.

Microsoft’s AI chief, Mustafa, stated in February that he thinks AI will be able to replace the majority of white-collar jobs in the next 12 to 18 months.

Microsoft CEO Satya Nadella has praised the company’s internal AI deployment, claiming it has resulted in significant productivity increases. He stated in April 2025 that up to 30% of the company’s coding effort was handled by AI.

In a January news release, he stated, “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.”

The Microsoft CEO said this while Zuckerberg and Nadella were seated onstage. “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,” Zuckerberg responded when Nadella asked him how much of the social media company’s coding was done by AI.

The two big companies’ announcements of layoffs coincide with the growing fear among tech workers that their employers will attempt to replace them with artificial intelligence. These anxieties are not unjustified.

Workers themselves are being used as training data for AI algorithms. Meta is placing new software on American employees’ computers to record their mouse movements, clicks, and keystrokes to feed into AI training data, according to an internal memo that Reuters recently discovered.

Other businesses who are stepping up their AI efforts have also drastically reduced their numbers. Citing advancements in AI, Block CEO Jack Dorsey let off over half of the company’s personnel in early March. At least 30,000 employees have been let go by Amazon in the last six months after the company revealed intentions to spend an astounding $200 billion in a single year in February. Last month, Oracle, which is having trouble paying off the debt from its multibillion-dollar datacenter investment, informed its staff that thousands of positions would also be eliminated.