Microsoft to Cut 4,800 Jobs, Citing Industry Changes and AI Investment
Quick Look
- Microsoft announced Monday it will lay off approximately 4,800 employees, about 2% of its global workforce.
- The cuts will heavily impact Xbox, with 3,200 gaming jobs and four studios affected, as the company invests in AI and faces industry shifts.
AI-generated summary
Why It Matters
Microsoft is cutting approximately 4,800 jobs, about 2% of its workforce, across the globe. The layoffs are driven by industry changes and a strategic investment in artificial intelligence.
American tech giant Microsoft announced Monday it is set to cut about 4,800 jobs, which represents approximately 2 percent of its workforce across the world.
Xbox - Microsoft's video game and digital entertainment division - faces the deepest overhaul in its history, with approximately 3,200 gaming jobs to be cut over the next fiscal year and the loss of four studios.
The multinational has been through multiple mass layoffs, as it invests massively in the artificial intelligence race.
"Our business is changing because the world around it is changing," Amy Coleman, Microsoft's executive vice president, wrote 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 the layoffs were mostly taking place within Microsoft's commercial business and Xbox.
She stressed the employees dismissed would not be replaced by AI, although automation is changing work within the company.
At Xbox, CEO Asha Sharma announced 3,200 positions would be terminated by the next fiscal year, with 1,600 immediate layoffs.
"Our business today is not healthy," Sharma wrote in an email sent to employees on Monday, stressing the company is operating at margin that are three to ten times lower than other platforms.
She said the company invested in Game Pass, multi-platform and a broader portfolio of content, but these businesses failed to grow at the expected speed.
"The industry is facing the most severe hardware crisis in its history. We must reset XBOX," Sharma warned.
"History is full of companies that mistake longevity for inevitability. We will not be one of them."
Xbox is set to lose four studios. While Compulsion Games and Double Fine Productions are set to transition to independent studios, Ninja Theory and Undead Labs have entered terms to join new ownership.
In France, Arkane's management is beginning the mandatory consultation with it Works Council to explore potential options.
What to Watch
AI outlook — possibilities, not facts
Further restructuring or layoffs in other tech sectors may follow.
Likely · Within months
Open Questions
- Which specific roles are most affected?
- What is the long-term strategy for the affected studios?
- How will these cuts impact Microsoft's AI development timeline?
