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Microsoft announces a new round of 4,800 layoffs, equivalent to 2.1% of the workforce, with a strong impact on Xbox, changes in game studios, and adjustments in commercial areas. The company faces a drop in shares, pressure for results, and adaptation to the advancement of artificial intelligence
Microsoft announced the immediate elimination of 4,800 jobs across the company, equivalent to 2.1% of its workforce. Within this move, the Xbox division concentrates a significant part of the cuts, with 1,600 positions affected in this initial stage.
According to CNBC, besides the immediate round, Xbox will also undergo a longer restructuring, with a forecast of 3,200 cuts by the fiscal year 2027. Thus, the numbers refer to different cuts: the immediate total for Microsoft and the specific plan for the gaming division over the period.
Xbox concentrates a heavy part of the cuts at Microsoft
In Xbox, the company announced the elimination of 3,200 employees by the fiscal year 2027.
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Of this total, 1,600 positions would be cut immediately, adding to the 4,800 layoffs applied across the company.
Xbox CEO, Asha Sharma, acknowledged in an internal message that a one-year restructuring creates additional challenges.
She stated that not all necessary changes could be made in a single day.
The cuts represent the departure of 20% of the division’s employees, according to a person familiar with the matter. Sharma also indicated that growth is expected to resume in 2027.
Game studios undergo changes
As part of the reorganization, four game studios will be spun off from Microsoft. The decision affects structures linked to the company’s strategy for the gaming market, one of the segments cited among those showing a revenue decline.
Compulsion Games and Double Fine Productions, acquired by Microsoft in the 2010s, will return to operating independently. Ninja Theory and Undead Labs, integrated into the company in 2018, will be transferred to new management.
The French studio Arkane, incorporated into Microsoft after the acquisition of ZeniMax Media for $8.1 billion in 2021, discusses strategic options with its workers’ council.
Cuts occur amid pressure from artificial intelligence
Amy Coleman, director of human resources and a Microsoft employee for 27 years, told employees that the way technology is built, implemented, and used is changing at a faster pace than at any other time in its history.
The executive said that artificial intelligence is not replacing the laid-off workers. However, she acknowledged that AI changes the way work is done, automates daily tasks, and requires continuous learning.
The company also launched, in April, a new voluntary retirement program for employees in the United States in senior director positions and below.
More than a third of those eligible accepted the offer.
Financial performance increases pressure on the company
Microsoft has accumulated a 19% drop in its large-cap technology stocks in 2026, up to the close of Friday, becoming the worst performer of the group in the mentioned period.
Despite growth in cloud and LinkedIn, the company faces declines in Windows licenses, Surface devices, and Xbox. In 2025, it had already carried out several layoffs, including a round of 9,000 jobs.
Coleman stated that decisions of this type are never easy and said that the company seeks to reduce the need for new cuts whenever possible.
Reuters confirmed that Microsoft cut about 4,800 jobs, equivalent to 2.1% of the workforce, in a restructuring that affects commercial areas and Xbox (Reuters); The Verge detailed about 1,600 immediate layoffs in Xbox, a reduction of 20% of the team by July 2027 and separation of studios like Double Fine, Compulsion Games, Ninja Theory, and Undead Labs (The Verge); meanwhile, LiveMint, citing CNBC, reported that the Xbox division will cut 3,200 people by the fiscal year 2027, in a statement attributed to CEO Asha Sharma (LiveMint
