Microsoft CEO Satya Nadella has addressed the company’s recent layoffs affecting over 15,000 employees in 2025, including 9,000 job cuts announced in July. In a memo to staff on July 24, Nadella called the decision “among the most difficult we have to make” and thanked those affected for their contributions.
The layoffs represent about 7% of Microsoft’s 228,000 employees and are part of a broader strategy to shift focus toward artificial intelligence. Microsoft has invested $80 billion in AI infrastructure this fiscal year alone. Despite this, the company reported $75 billion in net income over the past three quarters, prompting questions about the timing of the cuts.
The gaming division was hit hardest, with the closure of The Initiative studio and cancellations of major titles such as Perfect Dark and Everwild. Xbox CEO Phil Spencer said the move was necessary to “position Gaming for enduring success.”
Nadella emphasized that the layoffs were not based on performance but on Microsoft’s shift toward becoming an “intelligence engine,” with AI-powered tools like Copilot driving enterprise growth. Clients such as Barclays and Toyota have adopted more than 100,000 licenses each.
However, internal responses were mixed. On anonymous employee platform Blind, some staff criticized Nadella’s memo as “tone-deaf” and expressed concern about ongoing job insecurity. Others feared a cultural shift at Microsoft, with some employees reporting a rise in fear-driven management styles.
Nadella acknowledged the contradictions of record profits and deep cuts, referring to the “enigma of success” in a fast-moving tech industry with “no franchise value.” Microsoft’s stock price reached $500 on July 9, further fueling the debate.
The company is offering affected employees severance packages, extended healthcare, and job placement assistance. Still, without assurances against future layoffs, concerns remain high among current staff.
