Google and Microsoft are laying off hundreds from their Cloud units as the tech giants go all in on AI

[Aquaman]

Both companies cited their long-term visions when discussing the cuts

By

Laura Bratton

Published5 hours ago

 

 

 

 

 

 

Photo: Rafael Henrique/SOPA Images/LightRocket (Getty Images)

Microsoft and Google are slashing jobs from their otherwise very successful Cloud divisions as the companies shift gears to focus on AI.

Microsoft is cutting “hundreds” of roles from its Azure division’s Strategic Missions & Technologies team, a group that was formed to focus on cutting edge technologies such as quantum computing and space engineering, Insider reported June 3, citing unnamed sources. Also on Monday, reports surfaced that Google laid off at least 100 sales and engineering employees in its cloud unit.

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The companies’ motives are clear: they’re shifting resources to further their AI goals. Both have dedicated countless resources to advancing their generative artificial intelligence technologies — Google’s Gemini suite and Microsoft Copilot — over the past year as the industry goes all in on AI.

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A spokesperson from Google told Quartz in an email that the cuts would enable the company to invest “in areas that are critical to our business and ensure our long-term success” — subtext for AI. Microsoft did not immediately respond to Quartz’s request for comment, but Jason Zander, an executive who led the Microsoft SMT team hit by job cuts outright blamed AI for the layoffs. “Our clear focus as a company is to define the AI wave and empower all our customers to succeed in the adoption of this transformative technology,” Zander wrote in an internal email obtained by Insider. “Along the way, we make decisions that align with our long-term vision and strategy while ensuring the sustainability and growth of Microsoft.”

The job cuts, while surely signaling a shift in priorities, are no sign of struggle. Just over one month before the layoffs at Azure, Microsoft reported first-quarter revenues of $35 billion from its cloud business, up 23% from last year. Google parent Alphabet reported a surge in profits of almost 60% in the first quarter, with its cloud unit revenues jumping 28% from the prior year to about $9.6 billion.

Tech companies have laid off tons of workers over the past year despite their strong financials and soaring stock prices, citing pandemic-era overhiring, inflation, and changing priorities. In 2024 alone, nearly 90,000 workers in tech-related industries across the globe have been laid off, according to job cut tracker Layoffs.fyi.

That includes prior cuts at Google and Microsoft. Microsoft cut nearly 2,000 jobs in January; Google issued multiple rounds of layoffs this year, including one in early May affecting some 200 employees of its “Core” teams. It also includes layoffs and Google and Microsoft’s biggest rivals: Meta, Apple, Amazon, Tesla — basically all of the biggest tech companies in the U.S. aside from Nvidia.

By the numbers

1,500: Low-end estimate of number of job cuts at Google so far in 2024. This includes 1,000 in early January and “hundreds” from its ad sales team soon after as well as dozens of roles from its Moonshot X Lab, 200 “Core” roles, and the 100 cuts announced June 3.

2,000: Lowest estimated number of layoffs at Microsoft in 2024, including 1,900 cuts from Activision Blizzard and Xbox in January and the June cuts.

89,333: Layoffs at global tech companies estimated by the job cut tracker Layoffs.fyi. This number may be skewed by the tracker’s inclusion of layoffs at digital media companies, which it counts as “tech.”

$35.1 billion: Microsoft cloud division’s first-quarter revenue, up 23% from last year.

$9.6 billion: Google Cloud’s first-quarter revenue, up 28% from the prior year.