Microsoft Lays Off 4,800 Employees and Xbox Suffers the Hardest Blow
Microsoft is cutting 4,800 jobs, representing 2.1% of its global workforce, with the Xbox gaming division facing the most significant impact as the company adjusts to the era of artificial intelligence.
Microsoft is cutting 4,800 jobs, approximately 2.1% of its global workforce, as part of a further effort to reduce costs in the era of artificial intelligence.
The Xbox gaming division is being hit the hardest, losing one-fifth of its employees.
Amy Coleman, the company's Chief Human Resources Officer, who has twenty-seven years of tenure at the firm, wrote to employees that "the pace of change in technology is faster than at any other time since the company was founded."
Coleman noted that artificial intelligence is not replacing the laid-off employees, but emphasized that it is changing the way work is performed, and therefore employees must continue to learn and develop new skills.
According to an internal email sent to employees by Xbox CEO Asha Sharma, the division will cut 3,200 positions by fiscal year 2027, with 1,600 of them eliminated as of today.
Sharma wrote that she is aware that "a restructuring that unfolds over a full year creates additional difficulties, but it is not possible to carry out all the necessary changes in one day." According to her, the division will return to growth in 2027.
Microsoft's stock was the weakest among the technology giants in 2026, falling by 19% as of the close of trading last Friday, against the backdrop of investor concerns that generative models might push aside large parts of enterprise software, while Microsoft's own AI-based models and services have not yet become a significant success.
Cloud services and LinkedIn are showing accelerated growth for the company, while areas such as the Windows operating system, Surface devices, and the Xbox division are lagging, and their revenues are actually shrinking.
As part of the changes announced today, four game studios will part ways with Microsoft.
Compulsion Games and Double Fine Productions, which were acquired in the last decade, will become independent again.
Ninja Theory and Undead Labs, which joined the company in 2018, have "entered into agreements to join new ownership," according to Sharma.
The French studio Arkane, which came to Microsoft as part of the acquisition of ZeniMax Media for 8.1 billion dollars in 2021, is in contact with its works council regarding strategic options.
The business unit dealing with customer sales will also undergo reductions.
As recalled, in April, Microsoft first announced a voluntary retirement plan, which was aimed at American employees at the senior manager level and below.
More than a third of the eligible employees accepted the offer.
At the same time, layoffs at Dell.
The Xbox gaming division is being hit the hardest, losing one-fifth of its employees.
Amy Coleman, the company's Chief Human Resources Officer, who has twenty-seven years of tenure at the firm, wrote to employees that "the pace of change in technology is faster than at any other time since the company was founded."
Coleman noted that artificial intelligence is not replacing the laid-off employees, but emphasized that it is changing the way work is performed, and therefore employees must continue to learn and develop new skills.
According to an internal email sent to employees by Xbox CEO Asha Sharma, the division will cut 3,200 positions by fiscal year 2027, with 1,600 of them eliminated as of today.
Sharma wrote that she is aware that "a restructuring that unfolds over a full year creates additional difficulties, but it is not possible to carry out all the necessary changes in one day." According to her, the division will return to growth in 2027.
Microsoft's stock was the weakest among the technology giants in 2026, falling by 19% as of the close of trading last Friday, against the backdrop of investor concerns that generative models might push aside large parts of enterprise software, while Microsoft's own AI-based models and services have not yet become a significant success.
Cloud services and LinkedIn are showing accelerated growth for the company, while areas such as the Windows operating system, Surface devices, and the Xbox division are lagging, and their revenues are actually shrinking.
As part of the changes announced today, four game studios will part ways with Microsoft.
Compulsion Games and Double Fine Productions, which were acquired in the last decade, will become independent again.
Ninja Theory and Undead Labs, which joined the company in 2018, have "entered into agreements to join new ownership," according to Sharma.
The French studio Arkane, which came to Microsoft as part of the acquisition of ZeniMax Media for 8.1 billion dollars in 2021, is in contact with its works council regarding strategic options.
The business unit dealing with customer sales will also undergo reductions.
As recalled, in April, Microsoft first announced a voluntary retirement plan, which was aimed at American employees at the senior manager level and below.
More than a third of the eligible employees accepted the offer.
At the same time, layoffs at Dell.