After 6000 job cuts, Microsoft eyes more layoffs in July; CEO Satya Nadella says 'We just can’t...'

As artificial intelligence continues to reshape the global tech industry, Microsoft CEO Satya Nadella has made a strong call for responsibility and accountability. Speaking at Y Combinator’s AI Startup School, Nadella asked the tech community to think carefully about AI's real-world value, especially when considering how much energy these systems consume.

“If you’re going to use energy, you better have social permission to use it,” Nadella said. “We just can’t consume energy without creating social and economic value.”

His comments come at a time when AI was being praised as a tool for innovation, but it was also criticised for its environmental impact and potential to increase inequality. For Microsoft, one of the biggest developers of AI infrastructure, the issue is especially relevant. A 2023 report by Clean View Energy revealed that Microsoft used around 24 terawatt-hours of electricity in one year. That’s about as much as a small country uses.

Despite this, Nadella believes AI can be valuable if used to solve everyday problems. He gave the example of the American healthcare system, which is often slowed down by inefficient processes. “Something as simple as a hospital discharge,” he said, “can be improved using AI, saving time, money, and energy.”

Still, Microsoft’s push towards an AI-driven future hasn’t come without human costs. In the last year, the company laid off over 6,000 employees, blaming the cuts on changes caused by AI and automation. Microsoft said in a statement that the layoffs were part of “organisational changes necessary to best position the company for success in a dynamic marketplace.”

That marketplace is becoming more focused on AI and cloud technology. Microsoft, in partnership with OpenAI, is placing artificial intelligence at the centre of its business. But this also means reshuffling teams and reducing staff.

And more changes could be on the way. Reports suggest that Microsoft may soon cut jobs in its Xbox division as part of a broader reorganisation, with the financial year-end approaching. If true, this would be the fourth major round of layoffs in just 18 months.

Following its USD 69 billion purchase of gaming company Activision Blizzard in 2023, Microsoft is under pressure to boost profits. The company is now walking a fine line, developing advanced AI systems while also needing to prove that the energy use and job losses involved are truly worth the cost.