Microsoft is set to absorb a massive $800 million impairment charge after General Motors (GM) announced the shutdown of its Cruise robotaxi program. This development highlights the ongoing fallout for investors who once saw significant promise in the self-driving car venture.

The tech giant, which invested in Cruise in 2021, disclosed the financial hit in a recent regulatory filing. The charge will be recorded under “other income and expense” and wasn’t accounted for in Microsoft’s second-quarter earnings guidance issued on October 30, 2024. The charge is expected to reduce Microsoft’s diluted earnings per share by approximately $0.09 for the second quarter.

GM’s decision to dissolve Cruise marks a dramatic shift for a company that had poured more than $10 billion into autonomous vehicle development since acquiring Cruise in 2016 for $1 billion. The automaker now plans to merge Cruise’s operations with its own initiatives for driver-assistance technologies and eventual personal-use autonomous vehicles. GM also intends to increase its ownership of Cruise to over 97% by buying out minority investors.

The shutdown has left other major backers, including Walmart, Softbank, and Honda, reassessing their stakes. Honda, which previously partnered with GM and Cruise to launch a robotaxi service in Japan, has announced it will cease funding the joint venture.

Cruise initially garnered significant optimism when it raised $2 billion in January 2021, with Microsoft’s investment helping push its valuation to $30 billion. The partnership included plans for Cruise to utilize Microsoft’s Azure cloud platform to power its autonomous ride-hailing services. At the time, this was viewed as a strategic move aligning Microsoft’s cloud computing expertise with the future of mobility.

Now, the shutdown underscores the challenges faced by self-driving technology, including safety concerns and the difficulty of commercialization. Cruise had faced regulatory scrutiny and public skepticism, contributing to GM’s decision to pull the plug.

As the dust settles, Microsoft’s $800 million loss serves as a stark reminder that even tech giants aren’t immune to the volatility of emerging technology sectors.

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