Microsoft laying off 4800 employees, most of them working at Xbox

As it was widely rumored to do over the last few days, Microsoft has just announced it’s cutting no less than 2.1% of its global workforce – around 4800 employees across various departments and businesses – because, as, the internal memo send earlier today notes, “it needs to adjust resources and roles and shift how the company operates”. Amy Coleman, Microsoft’s chief people officer, claims that “the roles eliminated today are not being replaced by AI”, although it’s obviously hard not to think of these job cuts in the context of with the company’s immense ongoing investments in AI infrastructure and software/services development.

This is the fourth year in a row that Microsoft has announced a high number of job cuts, with over 10000 of them happening in 2023, around 4000 of them happening in 2024 and more than 14000 of them happening in 2025. Today’s announcement, along with restructuring adjustments happening periodically, raises the total number of job cuts Microsoft has made since mid-2022 to around 35000 across all of the company’s departments. The only tech company that has eliminated more jobs than Microsoft over the same period of time is Amazon (around 55000), as Alphabet, Apple and others have made far less job cuts, regardless of AI.

As expected, most of the 4800 roles just eliminated belonged to the company’s Xbox business: 1600 employees are being let go today and 1600 more will be over the next 12 months. As a result of this downsizing no less than five development teams the company had acquired at various points over the last decade no longer belong to Microsoft Game Studios: Compulsion Games and Double Fine Productions are going independent again, Ninja Theory and Undead Labs have been sold off, Arcane “is beginning required consultation to review potential strategic options” (presumably to either go independent or be acquired by a third party).

Microsoft’s new head of Xbox, Asha Sharma, claims that “none of the company’s first-party publicly announced games or projects are being cancelled as part of these reductions”, but that does not include titles such as Ninja Theory’s Senua, Arkane’s Blade or Undead Labs’ State of Decay 3 now. Rumors have been making the rounds about other unannounced games cancelled in various stages of development, but nothing is confirmed as of yet. Microsoft is also said to have put on hold most of the discussions it already had with indie developers for games of more limited scope the company planned to launch on Game Pass in the next 12-18 months.

Sharma has been implying that an “Xbox reset” is in the works since spring – today she confirmed in detail what she’s planning to do, essentially simplifying operations and processes in order to shape a faster, more agile gaming business. Whether the “fewer layers, smaller teams” approach will actually prove to be a more effective one remains to be seen, of course, but the Xbox was in dire need of sharper focus and clear goals anyway – so these changes, however painful for so many people, may indeed help it long-term.

Still, it’s no less frustrating to see that, yet again, thousands of development and creative jobs are being eliminated because of bad decisions and irresponsible choices made in the past by Microsoft’s upper management or leadership – people who seemingly never suffer the consequences of their actions in the same way fired employees did today through no fault of their own. Ain’t (corporate) life grand?