In a surprising move, Microsoft has terminated its Diversity, Equity, and Inclusion (DEI) team effective July 1st, citing "changing business needs." The decision, disclosed through internal communications reviewed by Insider, sparked immediate controversy within the tech giant. 

A team leader expressed discontent in an email to employees, lamenting that "true systems-change work associated with DEI programs everywhere are no longer business critical or smart as they were in 2020." 

This action comes just two years after Microsoft launched its ambitious Racial Equity Initiative in response to the murder of George Floyd. The initiative, aimed at fortifying a culture of inclusivity, committed $150 million to enhancing diversity within the company, including doubling the representation of Black and Hispanic leaders by 2025. 

Microsoft's move is part of a broader trend among major corporations that rushed to adopt DEI initiatives in the wake of heightened social awareness. Companies like Apple, Meta, and Amazon also unveiled similar programs in 2020, reflecting a nationwide surge in DEI job postings, which increased by 123% within three months of Floyd's death. 

Despite severing its DEI team, Microsoft asserted to Insider that its commitments to diversity and inclusion "remain unchanged." However, the tech giant faced criticism earlier this year when revelations from its 2023 Global Diversity & Inclusion report sparked backlash. 

A viral tweet highlighted pay disparities, suggesting that Microsoft paid its white employees less than their non-white counterparts, prompting scrutiny from figures like Tesla CEO Elon Musk. 

Microsoft's decision mirrors actions taken by other companies facing conservative backlash. Tractor Supply (TSCO) recently scaled back its DEI initiatives following criticism on social media, including threats of consumer boycotts over perceived "woke priorities." 

The retrenchment of DEI efforts extends beyond Microsoft. Companies like Zoom, Tesla, and Home Depot have also downsized their DEI teams through layoffs, contributing to a 5% reduction in DEI jobs in 2023, with an additional 8% decline already recorded in 2024 according to Revelio Labs, as reported by The Washington Post. 

In an internal email obtained by Business Insider and corroborated by IGN, the former lead of Microsoft's DEI team criticized broader trends in corporate America, cautioning that DEI programs are no longer considered "business critical." 

The email highlighted concerns that such initiatives may jeopardise federal contracts under potential regulatory changes. In response to queries, a Microsoft spokesperson affirmed their commitment to diversity and inclusion goals but did not directly address the implications of the team's dissolution. 

The company's actions reflect broader shifts among tech and gaming firms that initially prioritized DEI initiatives post-2020, only to revisit their sustainability in light of evolving business climates. Microsoft's retrenchment of its DEI team underscores complex challenges facing corporate HR strategies globally, raising questions about the future of DEI efforts in an increasingly polarized societal and regulatory landscape.