Microsoft to cut 4,800 jobs across commercial and Xbox divisions
Microsoft will eliminate about 4,800 jobs, or nearly 2.1% of its global workforce, as part of a broader corporate transformation to align resources with the company’s strategic priorities, Executive Vice President and Chief People Officer Amy Coleman said in a note to employees, Qazinform News Agency reports.
The layoffs will primarily affect Microsoft’s Commercial and Xbox divisions. The company also announced that four gaming studios will transition to new management and continue work on their intellectual property and ongoing projects.
Coleman said the restructuring reflects rapid changes in the technology industry and shifting customer needs, and emphasized that the job cuts are not the result of employees being replaced by artificial intelligence.
“I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves,” Amy Coleman wrote.
Microsoft said it has sought to minimize layoffs by redeploying employees whenever possible. Over the past year, the company reassigned more than 4,000 employees to new roles, including 500 this month. More than 30% of eligible employees opted into a recent voluntary retirement program.
The company said it will continue to invest in employee training, including AI skills, and provide financial support and career transition assistance to affected workers.
This is an important email I sent today to all employees at XBOX:
— ASHA (@asha_shar) July 6, 2026
Team,
We are beginning the most significant restructure in XBOX history. After careful consideration, I've made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include…
Xbox will cut 3,200 jobs in fiscal year 2027 and separate four game studios as part of what the company described as its most significant restructuring to date.
“We are beginning the most significant restructure in XBOX history. After careful consideration, I’ve made the difficult decision to reduce our team by approximately 3,200 throughout FY27. This will include approximately 1,600 role eliminations today, and in addition, four studios will leave XBOX to new management,” Chief Executive Officer of Xbox Asha Sharma said in a note to employees.
Compulsion Games and Double Fine Productions will become independent studios. Ninja Theory and Undead Labs are set to transition to new ownership, with funding to complete and develop their upcoming titles, Senua and State of Decay 3. In France, Arkane Studios is also reviewing strategic options.
Earlier, Qazinform News Agency reported that Microsoft announced a major $18 billion investment in artificial intelligence infrastructure in Australia, marking the company’s largest-ever commitment to the country.