Microsoft Lays Off Nearly 5,000 Employees Across Xbox, Commercial Sales

Microsoft cut approximately 4,800 roles, or 2.1% of its global workforce, impacting Xbox and commercial sales.

Microsoft announced layoffs of around 4,800 employees, representing 2.1% of its global workforce. This follows previous cuts and primarily affects Xbox and commercial sales divisions. The company's EVP and chief people officer, Amy Coleman, stated that while AI is changing how work gets done, the eliminated roles are not being directly replaced by AI.

The layoffs include 1,600 positions within Xbox, with CEO Asha Sharma noting that the business is "not healthy" and operating at significantly lower margins compared to competitors. Sharma also cited the industry facing the "most severe hardware crisis in its history." As part of the restructuring, Xbox will transition four gaming studios, including Compulsion Games and Double Fine Productions, to operate independently or under new ownership. Management layers within Xbox will also be reduced from 14 to a maximum of five.

This restructuring aims to reset Xbox by narrowing its focus and dropping creative bets that do not produce platform-scale returns. The company will instead concentrate on core strategic pillars. The layoffs coincide with Microsoft's $2.5 billion investment in its Frontier Company business unit, focused on enterprise AI deployments, suggesting a correlation between job cuts and increased AI spending.

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