Microsoft layoffs will eliminate about 4,800 jobs, or around 2% of its global workforce, as the company restructures its Xbox gaming division and commercial business.
The company said about 3,200 gaming jobs will be cut over the coming fiscal year. Four game studios will be spun off or sold, while a fifth faces a review process.
Amy Coleman, Microsoft’s executive vice president, told employees the company was changing because its industry was changing. She said most cuts fell within the commercial business and Xbox.
Coleman said the eliminated roles were “not being replaced by AI.” However, she said automation was changing how work is done across Microsoft.
The cuts follow Microsoft’s $2.5 billion push to embed 6,000 engineers inside enterprise clients. The company said the plan aims to accelerate the adoption of artificial intelligence.
Microsoft is cutting about 2% of its workforce, or roughly 4,800 jobs, joining other tech titans in a wave of layoffs as they shift investments to AI infrastructure https://t.co/vAhEj5gjvt pic.twitter.com/WWRs5AswA2
— Reuters (@Reuters) July 6, 2026Xbox chief executive Asha Sharma told staff that 1,600 positions would be cut immediately. She said the remaining reductions would continue through fiscal year 2027.
Xbox has faced repeated cuts since Microsoft completed its $68.7 billion acquisition of Activision Blizzard in 2024.
Read: Microsoft Announces 9,000 Layoffs, Impacting Less Than 4% of Workforce
Sharma described Xbox’s business as “not healthy” and said its profit margins were “3-10 times lower” than rivals. She has pledged to return the division to growth by 2027.
Compulsion Games and Double Fine Productions will become independent while keeping their intellectual property and game catalogs.
Ninja Theory and Undead Labs have entered terms to join new owners with funding for current projects. Arkane’s management in France has begun a Works Council consultation that could lead to a sale or closure
