Microsoft Corp. (NASDAQ:MSFT) cut 9,000 jobs in its second 2025 layoff round while Meta Platforms Inc. (NASDAQ:META) and OpenAI ignite a talent war with compensation packages reaching $20 million annually, creating stark contrasts in Silicon Valley’s artificial intelligence landscape.
What Happened: The layoffs affect less than 4% of Microsoft’s workforce across diverse teams and regions as the company maintains cost controls while investing $80 billion in AI data centers this fiscal year. Microsoft’s gaming division, including Candy Crush parent King, eliminated 200 positions, marking the company’s continued workforce reduction following 6,000 cuts in May.
The bidding war intensified after Meta recruited Scale CEO Alexandr Wang in a $14.3 billion deal and poached six star researchers from OpenAI for its new Meta Superintelligence Labs.
OpenAI CEO Sam Altman claimed Meta offered $100 million signing bonuses, though Meta CTO Andrew Bosworth dismissed these claims as dishonest during a company meeting.
Why It Matters: Roy Bahat of Bloomberg Beta noted the talent shortage drives extreme valuations, with only approximately 2,000 researchers capable of building foundational AI models globally. “In my 20 years in tech, I have never seen as clearly defined a market for extraordinary talent,” Bahat said.
The competition extends to universities, where companies pressure Ph.D. interns to abandon studies. “They’re pressuring them to drop out of school,” said Bill Aulet of MIT’s Martin Trust Center for Entrepreneurship. Companies argue AI advances are happening so rapidly that graduation delays could cost career-defining opportunities.
Microsoft’s third quarter revenue of $70.07 billion, up 13% year-over-year, and Azure’s 33% growth demonstrate continued AI demand despite workforce reductions.
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