Apparently Microsoft’s AI push is connected to the company’s sudden push to lay off a lot of developers in their video game division. But, it isn’t for the exact reasons that you think.
As reported by the Seattle Times, they provided this explanation:
Microsoft’s push into AI doesn’t mean the company is replacing workers with the technology. Rather, the significant cost of building out the infrastructure over multiple years has Microsoft looking to trim costs where it can.
During the company’s 2025 fiscal year, which ended Monday, Microsoft said it planned to spend more than $80 billion on infrastructure to meet AI demands. That’s a $25 billion increase in capital expenditures from the company’s 2024 fiscal year.
The outlet then pointed out that the layoffs that Microsoft did have during May and June seem to have been roles that could have been replaced by AI. But it does seem that the FUD surrounding generative AI, and the AI models behind that implementation, created this misleading picture that this technology could only affect technology industries in specifically one exact way.
Last May, when Seattle Times claimed Microsoft may have laid off employees to replace them with AI, Compulsion Games head Guillaume Provost “absolutely guaranteed” that Microsoft was not mandating game studios to use generative AI. This does seem to be credible, because Microsoft unveiled that they launched a new independent project experimenting with using generative AI and video games with MUSE.
Microsoft is an outlier given the size of the company and how much it decided to invest into generative AI. In contrast, after all the hype behind Apple Intelligence when it was announced, it’s become clear that Apple is considerably behind its rivals. Other industry giants like Google and Samsung are visibly ahead of Apple, but Microsoft has proverbially bet the house on the technology.
While some speculate that the AI bubble will eventually burst from failing to live up to its hype that hype bubble will still be going for at least the near future. That means Microsoft could do this again, or make other changes, for the sake of their AI investment, sometime in the future as well. If the Seattle Times’ report an analysis is accurate, it would be completely unfair to these game developers.
Their projects seem to have also had potential to be successful, and make Microsoft Gaming and Xbox successful. But if Microsoft considers them expendable, one wonders, even if they are committed to stay in gaming, how much they truly value this division.
