Microsoft Fires American Engineers, Seeks Foreign Replacements: Report

Microsoft is under fire after reports surfaced that it laid off 817 software engineers at its Redmond, Washington, headquarters — then requested 2,300 H-1B visas for foreign workers to fill similar roles.

The timing and scale of the move are fueling viral outrage online. Critics argue the company is replacing American workers with cheaper foreign labor, despite operating in one of the most expensive regions in the country.

As of 2025, the cost of living in the greater Seattle area is roughly 44.5% to 45% higher than the national average. Housing is the biggest factor, with home prices more than double the U.S. average. The typical home in Seattle now costs over $1 million, while rents range from $2,100 to $3,300 per month.

Microsoft’s decision comes amid a broader wave of tech layoffs. According to NerdWallet, more than 151,000 tech workers have been cut this year across 542 companies. While firms often cite cost-cutting and AI-related restructuring, this particular case raises legal and ethical questions.

Under current law, H-1B hiring is permitted only if it does not adversely affect the working conditions of similarly employed U.S. workers. Additionally, H-1B-dependent employers and those previously found to be willful violators must attest that they have not displaced (i.e., laid off) a U.S. worker within a specific time frame before or after hiring an H-1B employee.

From a corporate law perspective, executives and board members owe shareholders two primary fiduciary duties: the duty of care and the duty of loyalty. However, the business judgment rule grants companies broad discretion in managing their workforce — including hiring, firing, and restructuring decisions.

Put simply, courts generally won’t second-guess business decisions unless there is clear evidence of fraud, gross negligence, or self-dealing. As a result, layoffs — no matter how unpopular — are typically viewed as managerial decisions, not legal liabilities.

Microsoft’s Redmond cuts are just the tip of the iceberg. The company announced Wednesday it’s laying off 9,000 employees worldwide — just in time for the Fourth of July. Sources say the rise of AI has made some roles obsolete, but the optics of the holiday layoffs aren’t doing the multinational tech conglomerate any favors.

Per CNN Business:

It’s unclear whether AI directly contributed to Wednesday’s cuts and which Microsoft divisions will be affected. The Verge reported that Xbox leader Phil Spencer sent an internal note saying that his staff would be affected. Bloomberg also previously reported that the planned July layoffs would target the sales and Xbox teams.

Wednesday’s cuts come after Microsoft laid off 3% of its staff, roughly 7,000 employees, in May.

Other tech companies have also conducted layoffs this year, including Meta and Bumble. Amazon CEO Andy Jassy also warned his staff last month that AI would eventually help the company reduce headcount.

Microsoft said in April that its quarterly profits had increased 18% to $25.8 billion during the three months ended March 31, on the back of strong performance for its cloud business and AI services. The company is expected to release earnings for its fiscal fourth quarter later this month.

Online reaction has been swift. Many commenters on X point to a broader trend of corporate disregard for U.S. workers.

The backlash is growing — and it’s easy to see why. Companies like Microsoft are leaning on global talent while American workers face rising costs and uncertain futures.

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