Microsoft cuts 4,800 jobs in Xbox overhaul

Microsoft announced on Monday a significant restructuring that will eliminate about 4,800 jobs, representing roughly 2% of its global workforce. The majority of these cuts will impact the struggling Xbox gaming division.

The overhaul of Xbox, described as the deepest in its history, involves shedding approximately 3,200 gaming jobs over the next fiscal year. Additionally, four game studios are being spun off or sold, while a fifth is undergoing a review that could lead to its closure. This move follows a series of mass layoffs across the technology giant as it prioritizes massive investments in artificial intelligence.

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Our business is changing because the world around it is changing. Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it.

Amy Coleman, Microsoft's executive vice president, stated in a memo that the company's business is evolving with the world. She clarified that the eliminated roles are not being replaced by AI but acknowledged that automation is transforming work processes company-wide. The cuts in the commercial sector build on a recent $2.5 billion initiative to embed engineers within enterprise clients to accelerate AI adoption.

At Xbox, CEO Asha Sharma informed employees that 1,600 positions are being cut immediately, with the remainder to follow by fiscal year 2027. Sharma described Xbox's business as "not healthy," with profit margins significantly lower than competitors. She aims to return the division to growth by 2027. As part of the restructuring, Compulsion Games and Double Fine Productions will become independent, while Ninja Theory and Undead Labs are set to join new owners. Arkane's French studio is also undergoing a review process for potential strategic options.

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History is full of companies that mistake longevity for inevitability. We will not be one of them.