“Our business is changing because the world around it is changing,” says Microsoft’s executive vice president
WASHINGTON: Microsoft announced on Monday that it will cut approximately 4,800 jobs, representing about 2% of its global workforce, as part of a cost-cutting initiative that includes a major restructuring of its Xbox gaming division.
The move marks the most significant overhaul in Xbox’s history. Around 3,200 positions in the gaming business will be eliminated over the next fiscal year, while four game studios will be spun off or sold. A fifth studio has been placed under review and could face closure as the company reassesses its gaming operations.
WASHINGTON: Microsoft said the latest round of layoffs is part of a broader effort to adapt to rapid changes in the technology industry as it continues investing heavily in artificial intelligence.
The company is spending tens of billions of dollars on AI infrastructure, including data centres and advanced computing power, to remain competitive in the fast-growing AI market.
“Our business is changing because the world around it is changing,” Microsoft Executive Vice President Amy Coleman said in a memo to employees. “Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it.”
Coleman said most of the job cuts would affect Microsoft’s commercial business and its Xbox gaming division. She stressed that the eliminated positions were not being directly replaced by AI, although automation is increasingly transforming how work is carried out across the company.
As part of its commercial strategy, Microsoft will continue with its recently announced $2.5 billion initiative to place 6,000 engineers within enterprise customers to accelerate the adoption of AI technologies.
Within Xbox, Chief Executive Asha Sharma told employees that 1,600 jobs would be cut immediately, with additional reductions taking place through the 2027 fiscal year.
The gaming division has faced multiple rounds of layoffs since Microsoft’s $68.7 billion acquisition of Activision Blizzard was completed in 2024 following extensive regulatory scrutiny.
Sharma described Xbox as financially underperforming, saying its profit margins are three to ten times lower than those of its competitors. After succeeding longtime Xbox chief Phil Spencer earlier this year, she has pledged to restore the division to growth by 2027.
“History is full of companies that mistake longevity for inevitability,” Sharma wrote. “We will not be one of them.”
As part of the restructuring, Compulsion Games and Double Fine Productions will become independent studios while retaining ownership of their intellectual property and existing game portfolios.
Meanwhile, Ninja Theory and Undead Labs are set to join new owners who have committed funding to complete their ongoing projects.
In France, management at Arkane Studios has begun consultations with the company’s Works Council to evaluate strategic options, a process that could ultimately result in the studio’s sale or closure.
