Two of the world's largest technology companies are reducing their workforces in parallel moves that underscore the immense financial demands of the artificial intelligence race. Meta confirmed on Thursday it is cutting approximately 8,000 jobs, or around 10% of its global staff, while Microsoft is offering voluntary buyouts to roughly 8,750 employees in the United States.
Meta's layoffs come as the company funnels increasing resources into AI development, including the high salaries needed to attract specialised talent. The company has warned investors that its costs will surge next year to between $162bn (€143bn) and $169bn (€150bn), driven largely by infrastructure spending and competitive compensation packages for AI engineers. Bloomberg, which first reported the cuts, also noted that Meta plans to leave about 6,000 vacancies unfilled.
Wedbush analyst Dan Ives described the cuts positively in a note to investors, arguing that Meta is using AI tools to “automate tasks that once required large teams, allowing the company to streamline operations and reduce costs while maintaining productivity” and “driving an increased need for a leaner operating structure.”
Microsoft's Voluntary Approach
Microsoft's strategy differs from Meta's blunt layoffs. The software giant will extend buyout offers in early May to around 8,750 US workers, roughly 7% of its American workforce, according to two people familiar with the plan who were not authorised to speak publicly. The company is framing the move as giving employees “the choice to take that next step on their own terms, with generous company support,” per a memo from chief people officer Amy Coleman cited by CNBC.
Despite the gentler approach, the underlying pressure is the same: the enormous cost of building out AI infrastructure. Microsoft has spent billions expanding its global network of data centres to power cloud computing, AI systems, and its suite of productivity tools, including the AI assistant Copilot. These investments mirror a broader trend across the tech sector, where companies are reallocating resources from traditional roles to AI-focused positions.
For European observers, the developments highlight the intensifying competition for AI talent and capital, which is reshaping labour markets on both sides of the Atlantic. While the immediate job cuts are concentrated in the US, the ripple effects are felt in European tech hubs such as Berlin, Dublin, and Stockholm, where subsidiaries of these giants may face similar restructuring. The European Union's ongoing efforts to regulate AI through the AI Act add another layer of complexity for companies operating across the continent.
Meta and Microsoft are not alone. Oracle has also conducted layoffs this year, and other tech firms are expected to follow suit as they prioritise AI spending over headcount. The trend raises questions about the long-term impact on employment in the sector, even as AI promises to boost productivity and create new roles.
For now, the message from Silicon Valley is clear: AI is the priority, and traditional jobs are being sacrificed to fund it. European policymakers and business leaders will be watching closely as the race reshapes global technology dynamics.
