Google and Microsoft restructures cut jobs in cloud and AI divisions

Business Insider reports that Microsoft is now reportedly reducing staff in the Azure cloud computing division, joining the growing layoffs that have roiled the tech and media space this year.

Teams such as Azure for Operators and Mission Engineering will face hefty job cuts: some insiders report as many as 1,500 redundancies in Azure for Operators alone.

A Microsoft spokesperson said that such organisational changes are necessary for effective business management and noted, “We will continue to prioritise strategic growth areas to support our customers and partners.”

These reductions follow January’s layoffs of 1,900 positions at Activision Blizzard and Xbox. Other tech giants like Amazon and Salesforce have also cut jobs substantially in 2024.

Microsoft’s Azure cloud platform is experiencing robust growth due to the company’s AI investments and partnership with OpenAI, creators of ChatGPT.

Azure for Operations and Mission Engineering are part of Strategic Missions and Technologies, established in 2021 for quantum computing and space initiatives.

Separately, Microsoft is restructuring its mixed reality organisation but will continue to sell the HoloLens 2 augmented reality headset.

Addressing the changes, Jason Zander, a Microsoft executive, stated the company aims to ‘define the AI wave and empower customers to succeed’ with this technology, emphasising that decisions are made to align with Microsoft’s long-term vision and strategy.

Microsoft will discontinue services like Azure Operator 5G Core and Azure Operator Call Protection as part of these shifts. The Azure Operator Nexus team will be integrated into the product lines of the Cloud + AI organisation.

Zander acknowledged the difficulty of decisions impacting colleagues, saying, “We’re dedicated to supporting everyone impacted by these changes with respect, dignity, and transparency to fully support them through this transition.”

This restructure is in line with Microsoft’s AI ambitions, guided by Jared Spataro, head of ‘AI at Work.’ The company has refocused on developing Copilot AI products and has reduced staff numbers in Teams chat apps.

Echoing this approach, CNBC has reported that Google-owner Alphabet is also trimming its workforce in Google’s cloud division—a notably fast-growing area. Last week, Google informed its cloud staff about the discontinuation of positions in sales, consulting, strategy, operations, and engineering, with internal correspondence indicating that at least 100 positions have been cut.

The incremental cuts are in line with the appointment of the new head of the go-to-market organisation, with no reduction in its continued commitment to invest in key areas of enduring importance, according to Google. The changes also include some layoffs, which were felt particularly by the team that produces the annual Google Cloud Next event in April.

Since the start of 2023, Google has been consistently implementing cuts across the company, prompted by stricter deadlines, diminishing resources, and limited opportunities for career advancement, even though it has posted record profits.

Last month, these factors led to the elimination of over 200 roles within its ‘Core’ business segment, including product management and engineering. CEO Sundar Pichai has suggested that the number of cuts will decrease in late 2024.

With a significant 28% year-over-year increase, Google Cloud’s revenue reached $9.57 billion last quarter, driven by its AI technology, and exceeded analysts’ predictions. Its operating income quadrupled to $900 million, indicating profitability after years of heavy investment to match competitors like Amazon Web Services and Microsoft Azure. Yet, despite these successes, CEO Thomas Kurian’s cloud unit confronts the need for faster growth in an increasingly competitive AI environment.

The job cuts at Microsoft and Google highlight their ongoing strategic adjustments and efforts to optimise cloud computing and AI operations. Both companies are striving to remain competitive and profitable amidst evolving market conditions.

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Tags: AI, cloud, google cloud, microsoft