Microsoft to cut 4,800 jobs, spin off 4 gaming studios

• Company says AI is changing how work is done, but not directly replacing laid-off employees

Microsoft will cut 4,800 jobs, or some 2.1% of its workforce, as the US tech giant reduces costs and restructures its Xbox gaming business, said company messaging seen Monday by Anadolu.

The layoffs come after Microsoft launched a voluntary retirement program in April, the first such program in the company’s history.

Amy Coleman, Microsoft’s chief people officer, told employees that technology is being “built, deployed, and used” faster than at any point in her 27 years at the company, according to an internal message.

The company’s Xbox division will account for most of the reductions, with 3,200 jobs to be cut through fiscal year 2027, including 1,600 roles on Monday, Xbox CEO Asha Sharma wrote in a separate email to employees.

The cuts reportedly represent around one-fifth of the Xbox workforce

Sharma said the division would “return to growth in 2027,” while acknowledging that a year-long restructuring would create further challenges for employees.

As part of the restructuring, Microsoft will spin off four gaming studios.

Compulsion Games and Double Fine Productions, which Microsoft acquired in the 2010s, will become independent again, while Ninja Theory and Undead Labs have entered terms to join new ownership, according to Sharma’s note.

French-based Arkane Studios, which became part of Microsoft through its $8.1 billion acquisition of ZeniMax Media in 2021, is consulting its works council on strategic options.

Coleman said Microsoft’s commercial business, which focuses on selling to customers, would also be affected by job cuts.

The company said more than one-third of eligible employees accepted the voluntary retirement offer, which targeted US employees at senior director level and below.

Microsoft shares were down 19% this year as of Friday’s close, underperforming other major tech companies, amid investor concerns over the company’s artificial intelligence strategy and weaker performance in areas including Windows licenses, Surface devices, and Xbox.

Coleman said AI is changing how work gets done, but was not directly replacing employees affected by the layoffs.