Microsoft has announced it has cut 4,800 jobs - roughly 2.1% of its workforce - with Xbox to bear a large number of its latest layoffs.
Amazon, Google, Meta and Microsoft pledged to do more with less, cut their combined staff by roughly 100,000 people, and put a lid on employee costs - only to see them creep back up as the AI craze and its associated costs set in.
The companies' sales have soared in recent years, which allows them to support more workers. But even after adjusting for sales growth, some measures indicate that tech worker expenses haven't declined.
Research and development expenses - which include compensation for technical workers - are higher than they were in 2022 for each dollar of sales at Meta, Google and Amazon and a bit lower at Microsoft, according to Post calculations from company filings and data from S&P Global Market Intelligence.
This recent history suggests Big Tech companies might not be moving toward a future with fewer workers but recalibrating to spend the same, or more, on different people and projects.
The efficiency pledges have come back now that the four companies plan to spend more than $700 billion this year on big-ticket projects that are mostly related to AI, such as powerful computing equipment and buildings to house and power it.
AI might soon reduce hiring. But the reluctance or inability of the largest tech firms to cut too deeply so far could also show that the path to making a workforce AI-ready - whatever that means - isn't a predictable straight line charting declining headcount.
"We don't really know what the optimal size of the company will be in the future," Meta's top finance officer, Susan Li, said on a conference call Wednesday.
"My bias is these companies are going to continue to grow their headcount," said Mark Mahaney, a technology industry analyst at the investment firm Evercore ISI. If software developers are more productive with AI, companies could opt to maintain or even grow their numbers to take on more revenue-producing work, he said.
Beyond Big Tech, business software firm Oracle, Square parent company Block, and social media services Snap and Pinterest have also announced major layoffs in the past few months. In some cases, executives said that they were pushing out staff to shift resources to AI, or that the technology had made it possible to do the same work with fewer people.
Nicole Bachaud, a labor economist at the career site ZipRecruiter, said tech company job cuts get a lot of attention but are essentially meaningless for the wider American labor market of 163 million workers. "I hesitate to look at those as any kind of signal" about the health of the labor market or AI's potential reshaping of workplaces, Bachaud said.
Among AI boosters, the flurry of job cut announcements has opened a schism between those cheerleading for smaller workforces in the AI age and those who believe that unfairly blaming the technology for layoffs risks further souring the American public on the technology.
"Almost every company that does layoffs is blaming AI, whether or not it really is about AI," Sam Altman, CEO of ChatGPT owner OpenAI, said at a March conference when he listed explanations for AI's unpopularity in the United States. (OpenAI has a content partnership with The Post.)
Citing AI as an explanation for job cuts has become so routine in technology that it stands out when companies go another way.
When the video game company Epic Games announced it would push out about 20 percent of its employees recently, its CEO cited waning interest in its "Fortnite" game series. "The layoffs aren't related to AI," Tim Sweeney added in a note to his staff.
Amy Coleman, executive vice president at Microsoft, told employees in a memo that the tech giant needed to focus on areas that can deliver for customers amid a "fast-changing industry".
The sweeping layoffs will see more than 1,600 roles immediately axed at Xbox.
Asha Sharma, who recently took over as Xbox's chief executive, said in a note to staff it was "beginning the most significant restructure in Xbox history".
Another 1,600 jobs will be lost in the coming year, Sharma said in the note, shared on X.
Four Xbox game development studios - Compulsion Games, Double Fine Productions, Ninja Theory and Undead Lab - would also be spun off as part of the changes, she added.
"These changes are about a bigger future for Xbox, not a smaller one," Sharma said.
"History is full of companies that mistake longevity for inevitability. We will not be one of them."
Coleman meanwhile pointed to a changing customer needs in announcing Microsoft's company-wide cuts
"Companies don't get to choose whether their industry changes; they only get to choose whether they change with it," she said.
She noted that while the company would not replace the lost roles with AI, "what is true is that AI is changing how work gets done"
The announcement comes at an already difficult time in the gaming industry, with many studios still reeling from brutal layoffs in recent years.
In 2024, Xbox culled more than 2,000 staff and shuttered four studios bought prior to its bumper acquisition of Call of Duty maker Activision-Blizzard.
Little more than a year later, Microsoft said it would lay off as many as 9,000 workers after setting out plans to double down on its multi-billion-dollar AI spending.
The spiralling costs of hardware have also prompted firms including Microsoft to hike the price of years-old consoles and similar consumer gadgets - with many blaming AI data centres for pushing up demand too quickly for supply to catch up.
Sharma said on Monday that while she knew the cuts were "painful", there was a "reset" needed across Xbox's entire content portfolio, platform and operations.
She added that as part of this, Minecraft developer Mojang and Candy Crush developer King would now report directly to her.