Last year's increases were explicitly intended to bring Microsoft's pay closer to industry standards. By now saying, "Whoops, we accidentally gave you too much," it's clear that Microsoft has no interest in paying at industry-standard levels.
And to be clear: Microsoft is already laying people off. This isn't an either-or. In fact, their layoffs are probably the worst-handled in the industry, as they've been smeared across months, meaning Microsoft engineers have spent months in a state of anxiety, worried they might be included in the next batch, as each batch is only a few weeks apart. The best reason to work at Microsoft was the stability, but now they pay less and offer less stability than many competitors -- at least at Google or Amazon, you knew immediately if you were in the group being laid off.
(Sources for all of this: Former Microsoft SRE. I have friends and former colleagues at Microsoft who span from junior engineers to upper-level principal, i.e. 67. Personally, I nearly doubled my income two years after leaving Microsoft for another tech company.)
You choose, base salary is 100k and target raise is 10% two years in a row or 20% in the first year only. Do you want $120k + $120k or do you want $110k + $121k?
This involves the assumption that the "no raise" year is a one-off event to offset the double raises the previous year. It's a good deal.
Its more like
UPTO N% raise two years in a row or UPTO 2N% raise. In reality turned out to be N% raise + 0% raise.
like those ads in strip mall shops " upto 80% off"
* on select products
* conditions apply
I talked with a friend at MS and they said not only are they not getting any increase at all this year, the stock and bonus are going down to (or even lower than) last year's levels (before this supposed "expansion").
Kinda sucks...