Two interesting news morsels coming out of Redmond.

  1. Microsoft is re-negotiating their partnership with OpenAI to clear a path for an OpenAI IPO.

  2. Microsoft just announced layoffs across LinkedIn(!) and GitHub, with a focus on reducing management layers and streamlining operations. It amounts to about 3% of the workforce.

So, are these two news stories related in any way?

Microsoft has invested north of $13 billion in OpenAI. With OpenAI exploring an IPO, MS likely wants to ensure its continued access to bleeding edge AI technology.

Given that they reported record revenue ($62 billion) and profit in the latest quarter, the Microsoft layoffs appear targeted, because clearly there isn’t financial distress here.

Freeing up headcount and budget allows Microsoft to redirect resources to AI and other growth initiatives.