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Tech Tonic | Microsoft’s unlikeability crisis is something their AI cannot solve

The optics of Microsoft’s recent moves couldn’t be any worse, as it lays off chunks of the workforce whilst filing for visa requests.

Updated on: Jul 11, 2025 02:36 PM IST

ht_print | By Vishal Mathur

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Microsoft has laid off more than 15,000 employees in recent months. A glance at this sort of a headline would lead you to believe the world of tech was again in a tail-spin. After all, that is how it’s panned out over the years, also smartly leveraged by enterprises worldwide to strike fear in the hearts of the workforce. Look a little closer this time, and official US government data indicates that Microsoft has requested 14,181 applications for specialty visas

In early July, Microsoft announced that it would shut down The Initiative. (REUTERS)

Microsoft has laid off more than 15,000 employees in recent months. A glance at this sort of a headline would lead you to believe the world of tech was again in a tail-spin. After all, that is how it’s panned out over the years, also smartly leveraged by enterprises worldwide to strike fear in the hearts of the workforce. Look a little closer this time, and official US government data indicates that Microsoft has requested 14,181 applications for specialty visas (H-1B, H-1B1 and E-3 types) so far in the financial year 2025. There doesn’t seem to be a shortage of jobs — this may well be a replacement and relocation, perhaps with an assumption of reduced cost. At the cost of panic, everywhere else. Tone deaf approach, one could say?

In early July, Microsoft announced that it would shut down The Initiative. (REUTERS)

I’m not saying this based on some cloud fantasy. AP reported a memo by Xbox CEO Phil Spencer to employees, in which said the cuts were “for enduring success and allow us to focus on strategic growth areas”. Is there a contradiction? On the one hand, Microsoft is claiming it needs to streamline operations, trim fat, and realign resources; on the other, it’s applying aggressively to bring in international workers (who are often paid less comparatively, and can be more easily retained under threat of visa loss).

Last week on Tech Tonic:What is Meta’s play with the Superintelligence Labs?

The optics of that couldn’t be any worse. Even as I look at this realignment from the outside, the local workforce in the US may not be best pleased. And then along comes Microsoft’s treatment of its Xbox division that has been equally problematic, at least that’s how we on the outside would look at it. A representative masterclass in how to destroy creativity and demoralise a team that otherwise hadn’t done much wrong in the past few years. The company’s recently developed habit of wielding the axe has been particularly brutal to game development studios that were once considered jewels in the Xbox crown.

In early July, Microsoft announced that it would shut down The Initiative (a Santa Monica based game development studio; currently working on Perfect Dark futuristic thriller) as part of this broader wave of layoffs and restructuring. Mind you, Perfect Dark had become one of Xbox’s longest-running projects. Suddenly axed, if anyone can make sense of this? Perhaps it’s similar to an attention span of a baby, but Microsoft had positioned The Initiative as a ‘AAAA’ studio, one that would eventually create premium gaming experiences.

This isn’t the only one. It is believed mobile game Warcraft Rumble will no longer receive any updates. Xbox’s user research team has been hit too, with head of product for family and child safety, Mike Mongeau, laid off. Call of Duty studio Raven Software and Forza Motorsport creators Turn 10 have also been hit with layoffs.

In recent months, Xbox closed Arkane Austin, Tango Gameworks, Roundhouse Studios, and Alpha Dog Games, and laid off several employees at ZeniMax and Rare, all of which were acquired by Microsoft (alongside Bethesda, if that milestone rings a bell) in 2021. Even for someone who isn’t clued into the moves in the gaming industry, a pattern is clear — Microsoft acquires promising studios, saddles them with bureaucracy (perhaps even unrealistic expectations), and then eliminates them when they don’t immediately generate blockbuster returns. Perhaps they aren’t wrong, the approach is.

The product strategy has been frustrating elsewhere too. The company’s trajectory with Windows, for instance, is one of forced AI integrators, lack of progress on design changes and the introduction of a feature widely slated as a privacy nightmare, called Recall. Even if you don’t want Copilot to be available at every step in your Windows PC user experience, there is no way to turn it off. It looms over, uninvited. For all the promise in the early days as Microsoft made smart moves with OpenAI, it has become a distraction. At the same time, I’m not even sure if a Microsoft 365 subscription to use the Office apps makes much sense in terms of value anymore. I, for one, haven’t renewed it this year, and the alternatives work better to be fair.

Satya Nadella, once hailed for transformative leadership at Microsoft, has recently been heard saying things such as “maybe 20%, 30% of the code that is inside of our repos today and some of our projects are probably all written by software”. That software he is referring to, is AI. While in the previous few years Microsoft appeared to embrace a more employee-friendly approach that contrasted sharply with its combative past, recent moves suggest that transformation may have been more superficial than substantive. If there is a trust deficit through the chain (customers, employees, the gaming community), that problem is something AI may not be able to solve. No matter how powerful it becomes.

Vishal Mathur is the Technology Editor at HT. Tech Tonic is a weekly column that looks at the impact of personal technology on the way we live, and vice versa. The views expressed are personal.

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ABOUT THE AUTHOR

...Read MoreVishal Mathur is Technology Editor for Hindustan Times. When not making sense of technology, he often searches for an elusive analog space in a digital world. Read Less

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