Happy Friday and welcome to GeekWire. It's Todd Bishop with a special bonus episode for you. Microsoft delivered a surprise on Thursday, a voluntary retirement program, the first in the company's history. I went on Cairo News Radio to talk about the news with hosts Angela Poe Russell and Mike Lewis, and the conversation went in some interesting directions, from Wall Street to AI to what this might mean for the rest of the tech industry. and I thought you all might enjoy it. Coming up this weekend, we'll be featuring a conversation with a longtime tech leader who just released his first science fiction novel, envisioning a future shaped by the collapse of a global AI system. Imagine that. Stay tuned for that this weekend, but in the meantime, here's the radio segment. You're listening to Cairo News Radio, Northwest News. Okay, we are, it's Friday's Eve, right? It's Friday's Eve. You're listening to call it that Thursday. Absolutely. I'm Angela Poe Russell along with Mike Lewis. We are filling in for John Curley today on the John Curley Show. We are glad to have you with us. Kicking off this hour, we're talking about Microsoft. They've been in the news a lot in the last year related to building up AI and layoffs, but this is a little different, a twist. It's a weird one. This is actually one of the kind of oddly most surprising stories of the day. We have on with us, and I'll get to them in just a minute, Todd Bishop, the co-founder of Microsoft, who wrote this story. But this felt like a story you would have read about another industry in the 1980s or in the 1970s, maybe the early 1990s. Let me just read you the headline. But Microsoft will offer voluntary retirement to thousands of employees in a first for the tech giant. It looks like this could affect up to almost 9,000 employees that will be offered a voluntary retirement package just to winnow down the ranks of people. And I'm assuming that this would be more senior employees. But before I get into any more details about it, let's actually get the man who knows this story because he knows Microsoft better than anyone, Todd Bishop of GeekWire. Todd, how are you doing? I'm doing great, Mike, and good to see you, Angela. And I have to say, Mike, for anybody who just heard that Freudian slip of yours, I am not Paul Allen nor Bill Gates. I'm co-founder of GeekWire, not Microsoft. I was like, wait. But you've been there almost as long. I'll take it as a compliment. Yeah, thank you. Thank you for the correction on that. So co-founder of GeekWire, absolutely, with John Cook. So, Todd, tell us a little bit. I mean, were you as surprised by when you found out about this story as I was when I read it? shocked. This is not what is supposed to happen in the tech industry. You know, there are supposed to be layoffs and cutbacks. And really, they're going to, you know, as the tech industry goes, they're going to do everything they can, but something like this. It's really not something that you would expect. And it's more like you would expect from GM or IBM back in the day, you know, voluntary retirements. Oh, please, you go ahead. No, I was just going to say, so tell us, so what is actually happening here? Yeah. So this is the first ever voluntary retirement program at Microsoft. They're going to be offering it to people who have basically an age plus years at the company that equals 70 or more. So say you're 50 years old and you've been at the company for 20 years, you would qualify for this. It's also only within a certain band. So senior executives will not be eligible for this. For folks who know the Microsoft layers, it's basically 67 and below, if I understand correctly, level 67 and below. And bottom line they expect out of about 125 US workers in the United States at Microsoft about 7 of them will be eligible which translates to about 8 people potentially taking early retirement And that then, I've heard rumors that maybe they think about half of them will take it. So you're talking about a few thousand people potentially impacted by this, being able to take advantage. So here's my theory on why I think a lot of people will take it, because this deal is pretty sweet, Mike. It includes a healthcare component. And for so many people, their barrier to retiring isn't the money. It's entirely that, right. It's the healthcare. And so they're saying, hey, you could be 50 years old, take this money and have the medical component. And Todd, I see you nodding your head. It makes me feel like Microsoft is pretty motivated. Absolutely. Anybody knows, like if you quit a job, Cobra, I mean, you're paying, And, you know, it's a very big expense that you have to end up paying for health care on COBRA and to have it covered. Now, we have to say, we do not know the details yet. We don't know how long that health care is going to run. One little nuance here is that Microsoft reports earnings next week. And it's clear that whatever they're announcing today, whatever they did announce today, is material financially. And so we're actually expecting to learn more as the details go to eligible employees on May 7th and as Microsoft reports earnings next week. All right. May I share one more theory before you go to your next question? So you were talking about how unprecedented this is for a company like Microsoft to do it this way. So, of course, I'm like self, why would Microsoft do that? Here's my theory. They've had some record breaking profits in the last year and yet cutting people. I think they got a lot of bad press locally for those cuts while they were making a ton of money and it was all to build AI infrastructure. I'd like to think that Microsoft is a tech company with heart. And so Todd, you're laughing, but I think they got some bad press. So I feel like this is a way to kind of slow the bleeding on the negative press coverage and try to, you know, cut some people this way. There's my theory. Do you have a different one? Yeah, just yes and. I think that Microsoft is very clearly trying to do something other than layoffs here. So in that way, I think you're right that offering somebody a sweet retirement package that's ultimately good for them and for the company is better than saying, hey, hit the road, Jack. Well, you're making a ton of money. Exactly. And at the same time, I think the calculus is much more that they are spending tens of billions of dollars, $80 billion last year on AI, to your point, Angela. And they are spending so much on capital expenses that they have to show Wall Street that they're doing everything they can to reduce one of their other big line items, their operating expenses, their HR costs. And so in that way, I kind of look at these sorts of things as a bit of a tribute to Wall Street where they're saying, hey, look at what we're sacrificing for you. And the hope is, especially after the stock slide that Microsoft has had recently, that the market will react favorably and that investors will give them a little bit of leeway. So, Todd, on that, I mean, Wall Street, as you know, especially with tech companies, has always reacted glowingly to layoffs. So why, in this particular case, would Microsoft have needed to go down this road, the kinder, gentler Microsoft? Because it does have a history of not being so kind and gentle with its own staff. I mean, why is there another component here about maybe attracting future talent or try to differentiate itself from other companies? I mean, what else could be going on here? Possibly, although this is a one-time thing, and these folks are only going to have a one-month period to pick it. Keep in mind, this is basically part of a portfolio of expense reduction that Microsoft has tried to take on here. You know, they laid off 15,000 people last year. In February they started bringing people back to the office if they within a certain distance of Redmond three days a week And so you can see here that they trying to do everything they can to you know sort of winnow the field, as it were, and streamline their operations. And I think this is just the latest component. Are they going to, and I know that this is true with, say, you know, big discussions about trying to get voluntary time, even the Associated Press is trying to do the same sort of thing nationally to get its numbers down to a more manageable level. Is Microsoft in the position now of saying you have to apply for this, but if we really need you, you're not getting this package? Or is it really something that anyone in a certain category can opt into? It seems like this is, if you meet the requirements that you'll be eligible. In fact, I was talking with one manager at Microsoft today, and one comment he made was he's actually concerned looking at his direct reports and seeing how long they've been at the company, their age, their tenure, and the thing. He's worried he's going to lose some really good people. And so in that way, I think you're seeing this be kind of absolute. If somebody is qualified, my sense is that they're going to be able to take this package. So while we have you here, can we talk about AI for a moment? Oh, my gosh. I mean, we just had, yeah. Keep me on for the hour. Yeah. Yeah, I mean, Microsoft has made its decision. Meta, I just saw a headline on the screen about cuts happening. Yes. And so, you know, there's all this investment in AI. And at the same time, I feel like there's this slow building swell of people saying, what is the cost of this? Not only to humans, but the, well, it's all humans, but data centers and the environment and the water and electricity. And I wonder and I hear it a lot from the Gen Zers that are like, what is this doing? Could Gen Z be like the folks that end up stopping AI in its tracks in terms of the takeover? I certainly think that there's going to be a lot of pushback from younger generations. I see it in my own household. Whenever I bring up Claude or Gemini or ChatGPT, you know, I get the eye roll. but I have to tell you, I feel like at least in the business world, this is a runaway train that's not going to be stopped. The efficiencies that people are seeing, and you can't really trace a direct line between some of the layoffs and the AI efficiencies yet. In some cases there are, but it's not significant. And I don't think that was a driver of Microsoft's playoffs last year necessarily, but it seems like this is just something that's running down the hill. It's a snowball and it's not going to stop. I think there are massive concerns, to your point, about the environment and where this is all headed. And long-term, the real question is, will there be fundamental value seen by the end users, the companies, the businesses that are using AI to justify all of the billions that these companies are spending? Because right now, Well, Microsoft's customers, the biggest customers in terms of the AI infrastructure are OpenAI, Anthropic, and others. And the question is, are enough people going to be using ChatGPT and Claude and all the other tools to justify that expense in the long run? So let's dovetail onto that then, Todd. But what is going to – so this gesture, as you said, you saw this as somewhat of a gesture for Wall Street to lay off a bunch of people because the other end of that question is, of course, how much money Microsoft is spending on AI. What will they do? I mean it seems at some point this is almost potentially not – certainly not the last cut, but it's a significant enough one that they're not going to want to have to follow this one up with another round of 10,000 layoffs or something along those lines. And so where does Microsoft start making money on this, or is that still the open question Now in its cloud business I mean not to put too fine a point on it but you have seen in Microsoft Azure business largely because of the relationship with open AI that they had over the years significant increases in revenue largely tied to business demand for the open AI application programming interface in Microsoft Azure Not to get too geeky on you on the John Curley show, but the API, the OpenAI API has largely been exclusive to Microsoft over the years. And that is something that drives huge business demand. Now, you're seeing Amazon come in with a new relationship with OpenAI of its own through its bedrock platform. And that is really starting to drive demand for Amazon. And so the cloud business is where these companies are making most of their money. And that is where AI is really helping their revenue right now and ultimately their profits. To what end do we do all this? So all the efficiencies that happen. But where does this lead us? And like for me as a as a listen, I'm just a regular person. I'm not some executive running a business. But I think about if AI can help with scientific research, going through a bunch of data to help us solve problems, like real problems, then I'm here for it. But it just seems like there should be some guardrails around, you know, if we're going to, you know, tap environmental resources, let's do it for a good reason. Not because, OK, now you can make this email better for me. So now my brain isn't, you know, I guess I'm just saying to what end? Where does this lead us? To what end? This is where Mike is probably in a better position to comment than I, just simply because this really gets into regulation and government and the question of the lack of direction at the national level leading to states taking on their own individual AI policies and a patchwork of regulations across the country. And I think that there would be much clearer answers to this if there were a unified national vision for where this is headed, at least in the U.S. Well, not only that, but a unified vision on regulating tech at all. That part. Because that probably hasn't happened much. All right, Todd, one last question for you regarding the Microsoft and retirement. then is it likely or highly unlikely you think that there's any other – because all of these tech companies are to some degree or another worried about Wall Street and stockholders' view of them and their own executives are compensated through stocks. So they're worried as well. Do you see anyone replicating this whole retirement plan that Microsoft is putting out? That is a great question, Mike. Yes, absolutely. It's been fascinating to see how these kinds of things can almost become viral. in the tech industry. And to your point, it actually would be a great follow-up story for us to look into on who might be doing this other than Microsoft. And I got to tell you, that virus goes straight across the lake. I would not be surprised to see Amazon in three, four months come out with something very similar to this. But it would be an Amazon-style retirement, which is going to be smaller and narrower and cheaper, right? Yeah, they would just say that the employees have to disagree and commit to retirement. That would be the leadership principle on that. Listen, I could talk to you all day. This is a fascinating discussion. Me too. And I got to say, yeah, absolutely. Hey, I'm back in 5 p.m. drive time on Cairo. Just keep me here. It is. You're back in the driver's seat, finally. There we go. All right. Todd Bishop, co-founder of GeekWire, not of Microsoft, although he does know more about Microsoft than anyone I know. Todd, thank you so much for joining us here on Cairo Radio. Anytime. Thank you both. Thanks for listening and check back tomorrow for our conversation with Bill Hilf, board chair of the Allen Institute for AI, about his debut novel, The Disruption. See you back here then.
