Microsoft Informs Journalists Their Services Are No Longer Needed Due to AI

Microsoft (MSFT) is terminating dozens journalists and editorial workers at its Microsoft News and MSN organizations. Microsoft instead will rely on artificial intelligence to curate and edit news and content that’s presented on MSN.com, inside Microsoft’s Edge browser, and in the company’s Microsoft News apps. Many of the affected workers are part of Microsoft’s SANE (search, ads, News, Edge) division, and are contracted as human editors to help pick stories.

“Like all companies, we evaluate our business on a regular basis,” says a Microsoft spokesperson. “This can result in increased investment in some places and, from time to time, re-deployment in others. These decisions are not the result of the current pandemic.”

The layoffs were first reported on Friday by Business Insider, stating that around 50 jobs will be affected in the US. It was later reported that an additional 27 people will being let go in the UK by the Guardian.

Microsoft has been in the news business for more than 25 years, after launching MSN in 1995. At the launch of Microsoft News nearly two years ago, Microsoft revealed it had “more than 800 editors working from 50 locations around the world.”

Microsoft has been using AI to scan for content and then process and filter it and even suggest photos for human editors to pair it with, and has been encouraging publishers and journalists to make use of AI, too.

Two weeks ago, Mizuho Securities analyst Gregg Moskowitz reiterated a Buy rating and $205.00 price target on Microsoft, stating: “Our price target of $205 (unchanged) is largely based on our sum-of-the-parts model. Our price target also reflects a CY20E-21E EV/FCF multiple of 33x and 30x”.

The average price target for Microsoft is $208, which represents over 13% upside over the next 12 months from Microsoft’s current $183 level. (See Microsoft stock analysis on TipRanks).