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4,800 Jobs Cut
Microsoft said it is immediately eliminating 4,800 jobs, representing 2.1% of its workforce, as it cuts costs in the era of artificial intelligence.
The company said its Xbox division will lose about one-fifth of its staff, including 1,600 jobs on Monday, with additional cuts in the coming months.
In an internal message, Amy Coleman wrote, "The way technology is built, deployed, and used is transforming faster than at any point in my time here," as the company frames the restructuring as a response to a changing industry.
Xbox CEO Asha Sharma told Xbox employees that the division will cut a total of 3,200 people through fiscal year 2027, and she wrote, "Unfortunately, it is not possible to make all the necessary changes in a single day."
AI Not Replacing
Amy Coleman told employees that the roles eliminated today "are not being replaced by AI," while adding that "AI is changing how work gets done."
Coleman’s memo also said some tasks can now be automated, and she urged employees to "keep learning, keep building new skills, and keep adapting as the work evolves," as Microsoft reshapes how it operates.
Asha Sharma described the Xbox overhaul as "the most significant restructure in Xbox history" and said, "Our business today is not healthy," while setting a trajectory to reduce Xbox headcount by around 20% over two rounds.
The Verge reported Microsoft will also sell off four Xbox studios as part of the changes, with plans to eliminate around 20% of Xbox jobs by the end of the financial year.
Studios Spun Off
As part of the restructuring, Microsoft said Compulsion Games and Double Fine Productions will return to independent studios, while Ninja Theory and Undead Labs will transition to new ownership.
The BBC reported that four Xbox game development studios—Compulsion Games, Double Fine Productions, Ninja Theory and Undead Lab—would be spun off as part of the changes, and it quoted Sharma saying, "These changes are about a bigger future for Xbox, not a smaller one."
The BBC also said Microsoft would see more than 1,600 roles immediately axed at Xbox, with another 1,600 jobs lost in the coming year.
In parallel, Microsoft said it is exploring approaches similar to its voluntary retirement program, and it reported that more than 30% of eligible employees chose to participate.
