Microsoft Says AI Will Lead To Job Losses, Invests $80 Billion In The Tech

Microsoft has doubled down on its plan to invest $80 billion into artificial technologies in 2025, while at the same time admitting that advancements to the technology will lead to job losses. This was always expected to be the case in some sectors, but Microsoft is now coming out and saying it directly.

In a blog post, Microsoft president Brad Smith said, "AI, like all new technologies, will disrupt the economy and displace some jobs." Electronic Arts CEO Andrew Wilson has said the same thing. Smith, like Wilson before him, went on to say that, although AI might take some jobs, it will create new ones as well and that the "opportunities" from AI "outweigh many of the challenges ahead."

"If used well, AI will help lower the barriers to entry for many professions, replace rote tasks, and create a foundation for human creativity that builds on AI tools. AI will create new economic opportunities, allowing entrepreneurs to start new businesses and create new jobs. Along the way, AI can boost productivity in every sector of the economy, adding to the country's opportunity for economic growth," Smith said.

Microsoft has undergone significant layoffs in recent years, with the Xbox division affected as well. Following the buyout of Activision Blizzard, Microsoft laid off more than 2,500 Xbox employees. Whether or not any of these job cuts were due to AI is unknown. What is evident, though, is that Microsoft's top-down AI push also applies to Xbox. In fact, Microsoft has said AI will be baked into every product it has, including Xbox.

Microsoft is spending big to help realize these dreams, with Smith noting that Microsoft remains on track to invest about $80 billion to create AI-enabled datacenters to train AI modes and to release AI- and cloud-based software applications globally. Microsoft said "more than half" of this investment will be in the US. Smith said this reflects Microsoft's "commitment to this country and our confidence in the American economy."

Smith went on to say that advancements to AI could become the next major revolution, similar in nature to how the steam engine kicked off the industrial revolution in the 1700s and the manufacturing boom of the 1800s with electricity. In the 1990s, there was a technological revolution with computers and software, and AI could be the next big revolution, Smith said.

Tim Stuart, the CFO of Xbox, spoke in 2023 about how he expects AI to impact the future of gaming at Xbox, and he sees a bright future. Like other Xbox executives before him, he did not discuss any potential downsides to AI like job losses or displacement.

"I've never been more excited for a technology shift in the gaming landscape," he said at the Wells Fargo TMT Summit. "The last one we did was when we went from discs on consoles to let's call it online games and games-as-a-service; things like Fortnite and Minecraft, which really changed the landscape of how people play. Mobile games being another one. I think AI is one of those inflection points for us."

For developers, Stuart said studios spend millions of dollars on localization, scripting, and other elements, and he believes, "AI can take care of all of that."

"You can say, 'Hey I need a player to get from A to B.' And instead of having to write a thousand lines of scripting or code, you just have the AI get you from A to B," Stuart said, adding that AI can help with localization and game testing. AI might also help Microsoft find ways to make even more money, Stuart said. He gave an example of how a game like Minecraft can use AI to learn where players get stuck, but more importantly for the company's bottom line, where they spend money, Stuart said.

He estimated there are around 100,000 game developers in the world, but with AI, the number of potential game developers could climb into the millions, he said.

"Anyone in this room can be a game developer. The barista at your local Starbucks has an awesome idea for a game; they can use AI to go create a great mobile experience," Stuart said. He went on to say that some AI-generated mobile games will break through, and others might not, but overall, he expects there to be a new wave of game-creators thanks to AI in the future.

In other Xbox news, a reliable insider recently said Microsoft will release its next home console, reportedly codenamed Xbox Prime, in 2026, with a handheld coming later.