Microsoft Begins New Cost-Cutting Drive
Microsoft has announced around 4,800 job cuts as part of a major restructuring plan. The layoffs represent nearly 2 percent of the company’s global workforce. The move comes as Microsoft increases spending on artificial intelligence, data centers, and advanced computing power.
Amy Coleman, Microsoft’s executive vice president, told employees that the company must change because the world around it is changing. She said businesses cannot control industry shifts, but they can decide how to respond. Coleman said most of the affected roles are in Microsoft’s commercial business and Xbox division.
Xbox Division Faces Deepest Overhaul
The biggest impact will be felt at Xbox. Microsoft plans to cut around 3,200 gaming jobs over the coming fiscal year. Xbox CEO Asha Sharma told employees that 1,600 positions are being eliminated immediately. The remaining cuts will continue through fiscal year 2027.
The restructuring marks one of the deepest overhauls in Xbox history. Microsoft said four game studios will be spun off or sold. A fifth studio is under review and could face closure or a sale. The changes come after Microsoft’s $68.7 billion acquisition of Activision Blizzard, which was completed in 2024 after a long regulatory review.
Studios to Be Sold, Spun Off or Reviewed
Compulsion Games and Double Fine Productions will become independent studios. They will retain their intellectual property and game catalogs. Ninja Theory and Undead Labs have entered terms to join new owners, with funding expected to continue their current projects.
In France, Arkane’s management has started consultation with its Works Council. The review will explore strategic options and could lead to further closures or a sale.
Sharma described Xbox’s business as unhealthy and said its profit margins are far lower than competitors. She said the division must return to growth by 2027. Microsoft said the eliminated roles are not being directly replaced by AI, but acknowledged that automation is changing how work is done across the company.
