Microsoft’s AI future has fewer jobs

To anyone listening closely to what Microsoft CEO Satya Nadella has been saying over the past couple of years, this week felt like the clearest sign yet that AI is about to fundamentally change the size of Microsoft’s workforce. Microsoft is now offering voluntary buyouts to around 60,000 employees across the US, UK, Canada, and India.It’s the first time the company has presented such an offer to so many employees, expanding greatly upon the retirement offer that was limited to around 9,000 employees earlier this year. It’s all part of an ongoing effort to avoid reducing investment in AI infrastructure by lowering Microsoft’s operating costs and headcount.“Our total people costs will go down, our cost per head will go up, and my GPU per researcher will go up,” Nadella said on a podcast almost two years ago, responding to a question about AI’s impact on headcount. That’s a financial way of saying Microsoft will have fewer people, but it will offer higher salaries and more tools and AI power to those who remain.It also helps explain the continued layoffs we’ve seen at Microsoft over the past couple of years. Microsoft has been performing layoffs regularly over the past decade, but over the past couple of years, the layoffs and executive departures have been significant.These aren’t the annual layoffs of old; they’re now happening every few months. This week’s voluntary exit offer arrived just months after Microsoft laid off 4,800 employees, cuts that impacted its Xbox and commercial sales teams the most.For the first time in a decade, Microsoft’s overall headcount has also gone down year over year. Microsoft now employs around 223,000 people as of June 30th, 5,000 fewer than the 228,000 people it employed in 2025. Microsoft laid off 4 percent of its workforce in July last year, and it’s now offering voluntary buyout offers to around a quarter of its employees.More than 30 percent of the 9,000 eligible employees accepted a retirement offer earlier this year, but that number will likely be far less for the company’s latest Voluntary Exit Offer. That’s largely because, according to sources familiar, the offer is practically the same as regular severance terms at Microsoft — cash based on time at the company, accelerated stock vesting, some additional subsidized health coverage, and several months of career services.But what makes this unusual is the scale of the amount of employees who have been offered this exit. Even if only 5 percent accept the offer, that’s still 3,000 employees. I understand eligible employees have until December to decide, so we won’t know the impact of this offer for a while yet. With rumors of more layoffs in November and January, the amount of employees who do accept will surely inform Microsoft’s numbers for its next round of cuts.There are some, both inside and outside the company, who think Microsoft needs these cuts. “Microsoft needs fewer people,” says Merill Fernando, a former Microsoft Entra product manager. “I’ve been on the inside. I’ve seen how things get built. Lots of small orgs. Layers on layers. Silos everywhere.”Fernando paints a picture of a Microsoft where every organization “had its own priorities and its own decision makers,” so it’s hard to get the company to do anything collectively. It sounds a little like the meme where each organization in Microsoft is pointing guns at each other, competing instead of collaborating.Nadella even addressed that meme last year in a podcast with Stripe co-founder John Collison, acknowledging that the comic has defined Microsoft’s cultural narrative “more so than reality,” but that it had signaled some very real tensions inside the company. “In some sense, some of these divisional tensions are real issues that need to have tension. Social cohesion is not a goal, winning in the marketplace is a goal,” said Nadella.The question now is whether Nadella can reshape Microsoft for the AI era without undoing the cultural transformation that helped define his leadership. A company that has shifted to be built around empathy is now asking its employees to reckon with an AI future that could make many of their jobs unnecessary. How Nadella handles that transition will define his legacy as much as the growth and success he’s achieved over the past decade.Xbox’s architect of Forza Motorsport is leaving after nearly 27 yearsA few weeks ago I started hearing from Xbox employees that Dan Greenawalt, the longtime creative force behind Forza Motorsport, is leaving after almost 27 years. Greenawalt is departing as the head of Turn 10 Studios, the Forza Motorsport creator that merged with Forza Horizon developer Playground Games.Playground Games studio head Trevor Williams revealed the news in a recent internal memo, seen by Notepad. “Dan Greenawalt has decided that this is the right time for him to retire from Microsoft,” says Williams. Greenawalt will stay on as an adviser to Williams and the newly appointed Playground Games chief operating officer, Michel Bastien, “while he transitions to his next phase.” Here’s part of Williams’ memo about Greenawalt:It’s hard to overstate Dan’s impact over the past 27 years. From shipping Project Gotham Racing on the original XBOX in 2001 to leading the creation of Forza, founding Turn 10 Studios and appearing so many times on our E3 stage, usually making a dramatic entrance with a supercar in tow – and so much more – we owe tremendous thanks and gratitude to Dan. On behalf of both teams, I would like to thank Dan for his leadership, his support, and his partnership. I wish him well for whatever comes next.Microsoft revealed last month that it was merging its two Forza developers into a single studio as part of a massive restructuring of Xbox. Both Playground Games and Turn 10 Studios have merged into just Playground Games. The studio now has two locations: Playground Games Leamington Spa and Playground Games Redmond.With Greenawalt retiring and Turn 10 merged into Playground Games, it’s not clear if we’ll ever see Microsoft return to Forza Motorsport. More than 70 people at Turn 10 Studios were laid off last year, in a move that hit the vast majority of the studio. Over the past year, Turn 10 Studios has essentially been maintaining Forza Motorsport, and now the remaining employees have moved to Playground Games to work on Forza Horizon and Fable.It’s time to name The Elders Scrolls VI: SentinelIt’s been more than eight years since Bethesda officially announced the existence of the sixth game in its Elder Scrolls series. While there have been some debates around platform exclusivity for The Elder Scrolls VI, we’ve heard very little detail about the game that Bethesda has been working on all this time.Sources familiar with Bethesda’s plans tell me that the Xbox-owned publisher is about to announce that the next Elder Scrolls game will officially be called The Elder Scrolls VI: Sentinel. The announcement could come as soon as next month, during a period that will mark 15 years since The Elder Scrolls V: Skyrim was released.Bethesda has been showing off Sentinel gameplay in recent months, I’m told. Xbox CEO Asha Sharma got a live playthrough of Sentinel in August, and she praised the scale of the game and said “the story is even greater.”While I’m only expecting a name reveal next month and nothing more, I’ve been hearing some additional details about the game. If you want to totally avoid spoilers about the game, then don’t read the next paragraph.I understand that Sentinel will be set in Hammerfell, a province in the Elder Scrolls universe that’s appeared in The Elder Scrolls Adventures: Redguard and The Elder Scrolls Online. Sentinel will be the first game about the history of the Elder Scrolls, and help uncover the secrets of these mysterious ancient artifacts.The padXbox’s first chief operating officer is out after just a few months. This is a weird one. Helen Chiang is leaving Microsoft after 21 years. She previously served as the head of Minecraft before being promoted to Xbox COO in July. The sudden departure was announced in a surprisingly short memo from Xbox chief Asha Sharma last week. “Helen Chiang is leaving Microsoft today. I’m grateful for her years of service and wish her well,” says Sharma. It doesn’t seem like the Xbox COO position is going away, as Sharma notes that “we’ll share more on COO leadership as plans are finalized.” Eurogamer reported over the weekend that Chiang had been “terminated for policy violations.” I’ve heard similar chatter internally, but Chiang has been described to me by multiple Xbox employees as highly respected, with high integrity, so this turn of events is quite odd. I’m trying to get more details, but if you’ve heard anything, please reach out confidentially at notepad@theverge.com or through the secure Signal messaging app. (I’m tomwarren.01.)Microsoft’s new Surface Laptop Ultra update fixes reboot and display bugs. I ran into some weird issues with the Surface Laptop Ultra during my review, and Microsoft is now fixing some of them with a firmware update. The update addresses screen flickering, unexpected restarts, and lengthy reboot times alongside unspecified “additional bug fixes and general performance improvements.” I’m still waiting to see if Nvidia or Microsoft addresses the strange laggy feeling on the Surface Laptop Ultra, and it’s too early to say whether this firmware update addresses that or not yet.GitHub’s former CEO launched a competing platform for AI agents. We knew that Thomas Dohmke, former GitHub CEO, was building some kind of competitor to GitHub, but the result has surprised people internally during the week of GitHub’s Universe conference. Developers can use the new Entire platform to host and review code, but it’s also designed to work with AI agents and replaces pull requests with a “Trails” feature that offers “customizable evals that are scored by agents on every code push.” One GitHub employee tells me, “people are shocked, they have ambushed us up and down the stack on our own conference week.”Windows will soon let you perform an internet speed test without opening your browser. Microsoft added a speed test option to the Windows 11 taskbar earlier this year, but it was just a link to a speed test in Bing that opened in your browser. Now, Microsoft is actually integrating a full speed test into the taskbar, so you can right-click the network icon and perform an internet speed test right there.Windows 11 is getting some neat trackpad features. Microsoft is adding new Windows trackpad features that let you scroll through long documents and webpages faster. You’ll also be able to continuously scroll through a page by swiping the edge of your touchpad, along with support for single-finger scrolling. It’s the small things that count, and I love to see these kinds of features being added to Windows.Microsoft says its AI tool is better than doctors at diagnosing conditions. Microsoft claims to have developed an AI-powered tool that it says can diagnose conditions up to four times more accurately than human doctors. The findings were published last week in Science, one of the world’s most prestigious journals. Microsoft has pitted its AI system against human physicians on a series of scenarios drawn from medical case reports and emergency department data. While there’s still a long road ahead before this AI system can be widely deployed, Microsoft thinks its work is significant. “It needs clinical validation,” says Microsoft AI CEO Mustafa Suleyman in an interview with The Verge. “That is a leap, but this is a major milestone along that journey.”Microsoft Authenticator flaw lets malicious Android apps steal tokens. Security researchers at Enclave have discovered a vulnerability with Microsoft Authenticator that lets an unprivileged Android app with zero permissions “impersonate any installed Microsoft first-party app and have the Microsoft Authenticator broker hand it that app’s tokens.” The tokens could provide full access to mailboxes, files, and calendars. Microsoft has now fixed the flaw, and if you use Microsoft Authenticator on Android, then it’s time to update it immediately.Denmark has abandoned plans to ditch Microsoft Office after technical problems. Last year the government of Denmark announced it was ditching Windows and Office in favor of open-source alternatives to reduce its reliance on US vendors. It seems like the trial of moving away from Microsoft’s software hasn’t gone too well for the Danish government, though. The Danish Ministry of Digitalisation has reportedly ended its trial for an open-source alternative to Microsoft Office. Employees reportedly encountered issues with document formatting, blank pages, and tracking changes.Gears of War: E-Day cost $500 million to make. Gears of War E-Day has the highest Metacritic score of any entry in the franchise, but it faces some tough questions around how much it costs to create a AAA game these days and what success looks like. Kotaku reports that E-Day cost “over $500 million” to make, excluding marketing budgets. This has generated a lot of discussion online over E-Day’s success, especially as it’s a controversial test for any potential return to Xbox exclusivity. One source tells me that more than 400,000 copies of the game have been sold across Xbox and Steam, but the big question is whether Microsoft was happy with its Game Pass numbers for E-Day, and whether that revenue offsets any additional sales on Xbox and potential PS5 sales if a port had been released.Arkane Lyon and Blade could be about to be saved. Earlier this year, I reported that Microsoft was weighing up canceling its Blade game and shuttering Arkane. In the months since June, Microsoft has been in ongoing discussions with multiple publishers about a potential sale of Arkane Lyon amid consultations with the union representing the studio’s employees. French newspaper Le Monde now reports that Microsoft has a November 13th cutoff date for a decision on the future of Arkane Lyon, and Microsoft confirmed to PC Gamer that it’s extending this deadline by an additional month. An extension makes it seem like Microsoft is close to a deal, and I’m cautiously optimistic that Blade will be saved. We’ll find out in the coming weeks.Microsoft is ending Copilot support on smart TVs. After nearly two years of Copilot support on smart TVs, Microsoft is pulling the plug. I’d love to know how many people actually used Copilot this way, because it can’t be more than a dozen. LG says the Copilot TV feature is “scheduled for discontinuation during 2026” and a specific date is “subject to Microsoft’s timeline.”Microsoft reveals strong cloud growth amid financial reporting overhaul. Microsoft overhauled its financial reporting this quarter, placing Windows, Surface, and Xbox in a separate bucket to its more revenue generating AI and cloud efforts. Windows OEM revenue was down 22 percent amid a RAMageddon crisis that has seen the overall PC market drop by 20 percent in the recent quarter. Xbox hardware and content and services were also down, but a whole third of Microsoft’s revenue came from Azure ($33.17 billion of the $92.3 billion). I thought Nadella’s most interesting remarks on the earnings call were about Microsoft’s own AI models. “Our goal is to advance the cost to outcome frontier, which means delivering capabilities comparable to leading models within three to six months of their release at a fraction of the training cost, thereby allowing us to transfer those cost benefits to customers,” said Nadella.I’m always keen to hear from readers, so please drop a comment here, or you can reach me at notepad@theverge.com if you want to discuss anything else. If you’ve heard about any of Microsoft’s secret projects, you can reach me via email at notepad@theverge.com or speak to me confidentially on the Signal messaging app, where I’m tomwarren.01. I’m also tomwarren on Telegram, if you’d prefer to chat there.Thanks for subscribing to Notepad.Follow topics and authors from this story to see more like this in your personalized homepage feed and to receive email updates.Tom Warren