Microsoft is set to take a significant financial hit as a result of General Motors' (GM) decision to shut down its Cruise robotaxi program. According to a regulatory filing, Microsoft will record an $800 million impairment charge, a major blow to its self-driving car ambitions.

The charge is a direct result of GM's actions, which will see the automaker absorb its self-driving car subsidiary Cruise and combine it with its own efforts to develop driver assistance features. GM owns approximately 90% of Cruise, with Microsoft being one of the minority investors. The tech giant invested in Cruise in 2021, as part of a $2 billion funding round that valued the company at $30 billion.

As a result of the impairment charge, Microsoft's second-quarter diluted earnings per share are expected to take a hit of around $0.09. The charge will be recorded in other income and expense and was not included in the company's second-quarter guidance provided on October 30, 2024.

The shutdown of Cruise's robotaxi program marks a significant shift in GM's autonomous vehicle strategy. The automaker had invested over $10 billion in Cruise since acquiring the self-driving startup in March 2016. The goal was to commercialize autonomous vehicle technology via a robotaxi business, but it appears that GM has decided to pivot its focus towards developing driver assistance features and eventually fully autonomous personal vehicles.

The ripple effects of GM's decision are being felt beyond Microsoft, with other minority investors also being impacted. Honda, another minority investor, has announced that it will stop funding a joint venture with GM and Cruise to launch a robotaxi service in Japan.

The shutdown of Cruise's robotaxi program raises questions about the future of autonomous vehicle technology and the viability of self-driving car businesses. While GM's decision may be a setback, it's clear that the company remains committed to developing autonomous vehicle technology, albeit in a different form. The implications of this move will likely be felt across the industry, as companies continue to navigate the challenges of bringing self-driving cars to the masses.

In the short term, Microsoft's $800 million impairment charge will undoubtedly have a negative impact on the company's financials. However, the long-term implications of GM's decision remain to be seen. As the autonomous vehicle landscape continues to evolve, it will be interesting to see how companies like Microsoft and GM adapt and innovate in response to the challenges ahead.