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I've heard it can be a bit of a mixed bag right now. Some divisions are definitely more cautious and might be slowing down hiring, even internally. However, if you have a strong performance record and can clearly articulate how your skills benefit the target department, it might still be possible. Networking within the firm and speaking directly with hiring managers in areas you're interested in is probably your best bet to get a real sense of their openness.
From what I've seen and heard, internal mobility at MS is usually pretty robust, but the current market *does* seem to be causing some teams to be a bit more hesitant to onboard external (even internal) hires unless it's a critical need. Your best bet might be to focus on roles where your niche skills are highly valued and maybe highlight how your experience in [Department X] could bring a unique perspective. Good luck with your exploration!