Microsoft is laying off 10,000 employees
Microsoft CEO Satya Nadella speaks at the company’s Ignite Spotlight event in Seoul on Nov. 15, 2022.
SeongJoon Cho | Bloomberg | Getty Images
Microsoft said Wednesday that it’s letting go of 10,000 employees through March 31 as the software maker braces for slower revenue growth. The company is also taking a $1.2 billion charge.
Alphabet, Amazon and Salesforce are among the technology companies that have lowered head count in recent weeks. The contraction comes after demand for cloud computing and collaboration services picked up as enterprises, government agencies and schools encouraged remote work to reduce Covid exposure.
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Rising prices have prompted companies to become more careful about technology spending, hurting prospects for the tech stocks that outperformed other market sectors year after year. Now Microsoft and its peers are taking stock. In July Microsoft said it will trim less than 1% of employees, and in October it confirmed an additional round of job cuts that reportedly affected fewer than 1,000 workers.
“I’m confident that Microsoft will emerge from this stronger and more competitive,” CEO Satya Nadella told employees in a memo that was posted on Microsoft’s website. The move will reduce Microsoft’s head count by less than 5%, and some employees will find out this week if they’re losing their jobs, he wrote.
Microsoft shares moved modestly higher at the U.S. open after the announcement.
Employees in the U.S. who are eligible for benefits will receive severance that’s above the market, health care and stock vesting for six months. and 60 days’ notice before their work ends, Nadella wrote.
Nadella reiterated trends in the business climate that he has described in recent months.
“As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less,” he wrote. “We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one.”
Earlier this month Nadella had indicated the company might have to make adjustments.
“I think for us as a global company, we’re not going to be immune from what’s happening in the macro,” he said in an interview with CNBC-TV18. “We will have to also get our own sort of operational focus on making sure our expenses are in line with our revenue growth.”
Microsoft has called for 2% revenue growth in the fiscal second quarter, which would be the slowest rate since 2016.
Major layoffs aren’t an annual exercise for 47-year-old Microsoft, but they do happen occasionally. In 2017 Microsoft laid off thousands of employees in a broad reorganization of its sales unit. In 2014, following the acquisition of Nokia’s devices and services business, Microsoft cut 18,000 people.
The charge relates to severance, hardware and the cost of lease consolidation, Nadella wrote.
“Every one of us and every team across the company must raise the bar and perform better than the competition to deliver meaningful innovation that customers, communities, and countries can truly benefit from,” Nadella wrote. “If we deliver on this, we will emerge stronger and thrive long into the future; it’s as simple as that.”
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Tik Tok creators gather before a press conference to voice their opposition to the “Protecting Americans from Foreign Adversary Controlled Applications Act,” pending crackdown legislation on TikTok in the House of Representatives, on Capitol Hill in Washington, U.S., March 12, 2024.
Craig Hudson | Reuters
The Supreme Court on Friday will hear oral arguments in the case involving the future of TikTok in the U.S., which could ban the popular app as soon as next week.
The justices will consider whether the Protecting Americans from Foreign Adversary Controlled Applications Act, the law that targets TikTok’s ban and imposes harsh civil penalties for app “entities” that continue to carry the service after Jan.19, violates the U.S. Constitution’s free speech protections.
It’s unclear when the court will hand down a decision, and if China’s ByteDance continues to refuse to divest TikTok to an American company, it faces a complete ban nationwide.
What will change about the user experience?
The roughly 115 million U.S. TikTok monthly active users could face a range of scenarios depending on when the Supreme Court hands down a decision.
If no word comes before the law takes effect on Jan. 19 and the ban goes through, it’s possible that users would still be able to post or engage with the app if they already have it downloaded. However, those users would likely be unable to update or redownload the app after that date, multiple legal experts said.
Thousands of short-form video creators who generate income from TikTok through ad revenue, paid partnerships, merchandise and more will likely need to transition their businesses to other platforms, like YouTube or Instagram.
“Shutting down TikTok, even for a single day, would be a big deal, not just for people who create content on TikTok, but everyone who shares or views content,” said George Wang, a staff attorney at the Knight First Amendment Institute who helped write the institute’s amicus briefs on the case.
“It sets a really dangerous precedent for how we regulate speech online,” Wang said.
Who supports and opposes the ban?
Dozens of high-profile amicus briefs from organizations, members of Congress and President-elect Donald Trump were filed supporting both the government and ByteDance.
The government, led by Attorney General Merrick Garland, alleges that until ByteDance divests TikTok, the app remains a “powerful tool for espionage” and a “potent weapon for covert influence operations.”
Trump’s brief did not voice support for either side, but it did ask the court to oppose banning the platform and allow him to find a political resolution that allows the service to continue while addressing national security concerns.
The short-form video app played a notable role in both Trump and Democratic nominee Kamala Harris’ presidential campaigns in 2024, and it’s one of the most common news sources for younger voters.
In a September Truth Social post, Trump wrote in all caps Americans who want to save TikTok should vote for him. The post was quoted in his amicus brief.
What comes next?
It’s unclear when the Supreme Court will issue its ruling, but the case’s expedited hearing has some predicting that the court could issue a quick ruling.
The case will have “enormous implications” since TikTok’s user base in the U.S. is so large, said Erwin Chemerinsky, dean of Berkeley Law.
“It’s unprecedented for the government to prohibit platforms for speech, especially one so many people use,” Chemerinsky said. “Ultimately, this is a tension between free speech issues on the one hand and claims of national security on the other.”
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