Though this may be the right move for MSFT shareholders, this is certainly a backward step for computer science research as a whole. MSR is the last remaining industry lab which focuses on pure academic research, and I hope MSR remains.
If your hope is to attract top global talent to work on global issues, having two labs nearly on top of each other in Santa Barbara and the Valley doesn't make much since.
Current lab locations: Redmond, WA; Cambridge, UK; Beijing, China; Munich, Germany; Bangalore, India; Santa Barbara, CA; Cairo, Egypt; Herzelia, Isreal.
I think you may be confusing Santa Barbara, which is close to Los Angeles and approximately 5 hours drive from the Valley, with the closer Santa Clara, which is in the Valley, or Santa Cruz, which is about an hour south of the Valley.
That said, I wasn't sure if your comment was saying they were just confused at to where Santa Barbara is located, or if there was only labs in Santa Clara, not in Santa Barbara. That said, I find it very strange to close the SV MSR office. Lot's of California-only folks who don't want to move to the tourist-city of SB/don't fit into the MSR-StationQ at UCSB now are off the market.
Though it's interesting to note that both locales have exceptionally high costs of living.
For general amenity, I might prefer Santa Barbara to Mountain View, but you're sacrificing some cultural access in the process. Los Angeles isn't too far away, but the traffic is absolute murder.