Microsoft is cutting about 4,800 jobs worldwide, roughly 2 percent of its global workforce, with the heaviest impact falling on its Xbox gaming division in the biggest overhaul in the units history. The company confirmed the layoffs on Monday as part of a broader cost cutting drive.
Around 3,200 gaming positions will be eliminated over the coming fiscal year. Four game studios are being spun off or sold, while a fifth is entering a review process that could lead to closure.
The layoffs are the latest in a series of mass job cuts at the technology giant as it channels massive spending into artificial intelligence, joining rivals in pouring tens of billions of dollars into AI ready data centres and computing power.
Amy Coleman, Microsofts executive vice president, said in a memo to employees that the companys business is changing because the world around it is changing. She said companies do not get to choose whether their industry changes, only whether they change with it.
Coleman said most of the cuts fell within Microsofts commercial business and Xbox. She said the eliminated roles are not being replaced by AI, though she acknowledged automation is reshaping how work is done across the company. On the commercial side, she said the cuts build on a $2.5 billion plan announced last week to embed 6,000 engineers inside enterprise clients to speed up AI adoption among reluctant customers.
At Xbox, CEO Asha Sharma told staff in a separate memo that 1,600 positions are being cut immediately, with the remainder to follow through fiscal year 2027. Xbox has faced repeated rounds of layoffs since Microsofts $68.7 billion acquisition of Activision Blizzard closed in 2024 following a lengthy regulatory review.
Sharma described Xbox as not healthy, with profit margins three to ten times lower than rivals. She took over from longtime Xbox chief Phil Spencer, who retired in February, and has pledged to return the division to growth by 2027. She wrote that history is full of companies that mistake longevity for inevitability, adding that Xbox will not be one of them.
Four studios are leaving Xbox as part of the restructuring. Compulsion Games and Double Fine Productions will become independent, retaining their intellectual property and game catalogues. Ninja Theory and Undead Labs have entered into terms to join new owners with funding to continue their current projects.
In France, Arkanes management has begun a required consultation with its Works Council to review what Sharma called potential strategic options, a process that could lead to further closures or a sale.
