Meta and Microsoft cut 20,000 jobs, raising concerns about AI labor crisis

Possible layoffs of more than 20,000 people Meta and microsoft It was revealed several months later on Thursday. Amazon The company has announced the most sweeping layoffs in its history, but this may be just the beginning.

The same companies that collectively spend hundreds of billions of dollars a year building out artificial intelligence infrastructure to meet the surge in demand for AI services are pursuing AI-driven efficiencies by reducing their workforces. They’re also still trying to right-size from the overemployment caused by the pandemic.

Given the rapid infiltration of AI across corporate America, many economists and industry experts worry that a labor crisis could arrive today—rather than sometime in the future. As of this week, more than 92,000 tech workers have been laid off by 2026, bringing the total since 2020 to nearly 900,000, according to Layoffs.fyi.

“This represents a fundamental structural change, not a temporary market correction,” said Anthony Tuggle, an executive coach and leadership expert who previously worked in the field of AI. “We are witnessing the beginning of a lasting transformation in the way work is organized and performed across industries.”

Job anxiety has been on the rise since OpenAI announced ChatGPT in late 2022, showing enhancements to chatbots leveraging new AI models. Workplace anxiety began to rise last year as Anthropic’s Claude tool began doing work across business units, raising concerns that a wide range of existing software solutions were at risk.

Techno-optimists argue that AI is reshaping human work rather than replacing it. And, like previous waves of large-scale industrial disruption, new jobs will be created to meet the needs of a changing economy. After all, mobile app developers didn’t exist in the pre-smartphone era. And what was an IT administrator good for before creating servers?

At the very least, the gap between job losses and job creation in the AI ​​era appears to be widening. Motion Recruitment’s 2026 study shows that while AI adoption is slowing hiring for entry-level “general IT roles,” AI jobs are in high demand. According to the report, salaries for technical jobs will remain almost flat from 2025 onwards, with the exception of some specialized jobs such as AI engineers.

Rajat Bagheria, CEO of physical AI startup Chef Robotics, said AI is likely to create jobs, but “there’s a lot of uncertainty about what that will look like at this point.”

“We are just beginning to understand how much of our day-to-day tasks AI can handle across many different types of jobs,” Bagheria says.

Mehta only hinted at AI in Thursday’s announcement. The company told employees in a memo that it plans to begin reducing its workforce starting May 20 and lay off 10% of its workforce, which equates to about 8,000 people, all as part of its “continuing efforts to run the company more efficiently and offset other investments we are making.” The company is also scrapping plans to fill 6,000 open positions, according to the memo.

Around the same time that the meta news broke, Microsoft confirmed it was making a voluntary acquisition offer, the first for the 51-year-old software giant. About 7% of U.S. employees will be affected, said a person familiar with the plan, who asked not to be identified because the numbers have not been made public. The company has approximately 125,000 U.S. employees, which could result in a total of up to 8,750 job cuts.

It’s not just the tech industry where tech jobs are at risk.

Nike announced new layoffs Thursday, affecting about 1,400 employees across the company, most of them concentrated in technology departments.

Chief Operating Officer Venkatesh Alagirisamy told employees: “These reductions are extremely difficult for both our teammates who are directly affected and the teams around us.”

According to job search site Glassdoor’s recent Employee Confidence Index, the technology industry has seen the worst year-over-year drop in trust of all industries, dropping 6.8 percentage points to 47.2% in March compared to the same month last year.

Daniel Chao, Glassdoor’s chief economist, said fewer people are quitting their jobs due to fear of volatile markets, and worries that market fluctuations are taking a toll on employee morale and career satisfaction. That also means further layoffs.

“Because natural attrition is not happening as much, companies are becoming more aggressive in forcing employees out,” Zhao said. “Whether that means explicit layoffs or raising performance appraisal standards, employers are taking a variety of steps to reduce labor costs.”

snap announced last month that it would cut about 1,000 jobs, or 16% of its workforce, and eliminate at least 300 open positions. CEO Evan Spiegel mentioned AI efficiency in a letter to staff. sales force in September laid off 4,000 customer support roles, with CEO Marc Benioff saying, “We need to reduce headcount.”

oracle announced in March that it would lay off thousands of employees as it ramps up AI spending. The company’s core software business has been affected by market panic regarding AI-related replacements. Meanwhile, the company is looking to compete with hyperscalers in the AI ​​infrastructure market, and is facing declining cash flow and pressure from investors on how much to raise.

Analysts at TD Cowen wrote in a January note that cutting 20,000 to 30,000 jobs could increase Oracle’s free cash flow by $8 billion to $10 billion.

Amazon, the leading tech company, has cut at least 30,000 jobs since October, about 10% of its corporate and tech workforce. In between announcements of mass layoffs, the company has implemented gradual layoffs across the company, albeit on a smaller scale. Google has also implemented small but regular cuts starting in 2023.

But the expenses continue.

Alphabet, Microsoft, Meta, and Amazon are expected to spend a combined nearly $700 billion this year to accelerate the buildout of AI infrastructure. The companies are scheduled to report quarterly results on Wednesday, and analysts are expected to ask questions about updated spending plans and future layoffs.

In the startup world, the AI ​​boom is creating a very clear pattern. That means companies are growing much faster with far fewer people. Venture capitalists say companies that don’t operate in that spirit have more trouble raising money.

Zach Brattan Glennon, a partner at venture firm Gradient, said it is possible to have a customer relationship management app up and running in a day.

“Companies that used to have 250 employees in the software business are now able to achieve $50 million in revenue with about 50 employees,” he said. “Do you think there will be 50 or 100 unicorns and decacorns? Absolutely. Can you start a public company with 200 employees? Absolutely.”

Peter Morales, CEO and founder of Code Metal, describes the market similarly.

“The pattern today is that small teams grow revenue faster than ever before,” he says.

Developers at Silicon Valley’s largest companies, with well over 100,000 employees, are well aware of this trend. They have access to the same vibe coding tools as nearby startups and see new products brought to market at dizzying speed.

The dramatic pace of change and disruption has created understandable levels of job insecurity, Glassdoor’s Chao said.

“This is a bit of an unusual technology boom, and the people participating are feeling pretty anxious about what’s going on,” Zhao said. “A lot of workers are feeling stuck right now.”

—CNBC’s Annie Palmer, Jordan Novett, Laura Kolodny and Jonathan Bunyan contributed to this report.

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