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Microsoft cuts 4,800 jobs as Xbox absorbs sweeping overhaul

Microsoft is cutting about 4,800 jobs, with Xbox and commercial sales taking the brunt. The company says AI is changing how work gets done while Xbox prepares its biggest restructuring yet.

Published about 2 hours ago
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Microsoft lays off nearly 5,000 employees across Xbox, commercial sales

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Microsoft lays off 4,800 employees

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Microsoft announces new layoffs: Nearly 5,000 employees lose their jobs

Microsoft cuts 4,800 jobs as Xbox absorbs sweeping overhaul
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A fiscal-year reset hits Redmond

Microsoft began its new fiscal year by eliminating about 4,800 jobs, or 2.1% of its global workforce, with the cuts concentrated in commercial sales and Xbox.techcrunch +1 The company said roughly 600 positions are being cut in Washington state, where it is headquartered, while its overall in-state workforce is expected to remain near 52,000 after offsetting hiring and redeployments.geekwire +1

The move extends a broader restructuring cycle after Microsoft cut roughly 15,000 jobs last year and offered voluntary retirement to eligible U.S. employees this spring.geekwire +1 Chief People Officer Amy Coleman told staff the company needed to “adjust resources and roles” as technology is built and used differently, while saying the eliminated roles are not being directly replaced by AI.techcrunch +1

Xbox absorbs the sharpest blow

The gaming unit is taking the deepest hit. About 1,600 Xbox employees are being laid off immediately, and the division plans to cut roughly 3,200 roles through fiscal 2027, amounting to about 20% of its workforce.cnbc +1 Asha Sharma, the head of Xbox, called it the most significant restructuring in the division’s history and told employees the business was operating at margins “3–10x lower” than comparable platform and publishing companies.techcrunch +1

Microsoft is also moving four studios out from under Xbox ownership. Compulsion Games and Double Fine Productions are set to become independent again, while Ninja Theory and Undead Labs have entered terms to join new owners with funding to continue key projects.cnbc +1 The reset shifts Xbox away from smaller creative bets and toward larger franchises and higher-margin pillars such as Mojang and King.techcrunch +1

AI priorities frame the trade-off

The reductions are landing as Microsoft pours capital into AI infrastructure and tries to make its sales and consulting teams more technical. NBC reported that Big Tech’s AI outlays are set to top $700 billion this year, while Microsoft’s own 2026 spending projection has reached $190 billion.nbcnews GeekWire tied the sales overhaul to Microsoft Frontier Company, a $2.5 billion initiative meant to embed 6,000 engineers with customers deploying AI.geekwire

Coleman said AI is still changing daily work because some tasks can be automated, even if the company rejects a simple one-for-one replacement narrative.techcrunch +1 Microsoft says it redeployed more than 4,000 employees into new roles over the past year, including 500 in the past month, and that more than 30% of eligible workers accepted the recent voluntary retirement program.theverge +1 The message to remaining employees is that the restructuring is not a one-day event: Coleman’s memo said other parts of the business will need to make similar changes.geekwire