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Microsoft Layoffs: Microsoft is cutting 4,800 jobs. The reduction represents 2.1% of the company's total workforce.
The Xbox division is bearing the brunt of the cuts, losing roughly one-fifth of its staff.
The move marks Microsoft's latest step to control costs as artificial intelligence reshapes the tech industry.
Amy Coleman, Microsoft's chief people officer, announced the cuts in a Monday memo to employees. Coleman has spent 27 years at the company.
She said the pace of technological change is unlike anything she has seen during her tenure at Microsoft.
Xbox CEO Asha Sharma outlined the scope of the cuts within her division in a separate email to staff.
She said Xbox will eliminate 3,200 positions through fiscal year 2027. Of that total, 1,600 roles were cut on Monday.
The remaining 1,600 job losses come on top of the companywide total of 4,800 immediate departures.
Sharma acknowledged the difficulty of a prolonged restructuring process. She said Microsoft cannot make all necessary changes in a single day.
A person familiar with the matter said the cuts amount to 20% of Xbox's total workforce.
The person spoke on condition of anonymity to discuss internal company matters.
Sharma expressed confidence that Xbox will return to growth in 2027. Microsoft has struggled on Wall Street this year.
The company was the worst-performing megacap tech stock in 2026 as of Friday's close, with shares down 19%.
Investors are concerned that generative AI could disrupt large segments of the enterprise software market.
Microsoft's own AI products have also yet to achieve major commercial success.
The company conducted multiple rounds of layoffs last year, including one that eliminated 9,000 jobs.
Microsoft's cloud computing and LinkedIn businesses have shown strong growth in recent quarters.
Other divisions have lagged behind. Windows licensing, Surface device sales and Xbox gaming revenue have all declined.
As part of Monday's restructuring, Microsoft will spin off four gaming studios, according to Coleman. The company's commercial sales division will also see staff reductions.
Compulsion Games and Double Fine Productions, both acquired by Microsoft in the 2010s, will become independent studios again, Sharma said.
Ninja Theory and Undead Labs, which joined Microsoft in 2018, have reached agreements to transition to new ownership.
France-based Arkane Studios, acquired as part of Microsoft's $8.1 billion purchase of ZeniMax Media in 2021, is currently discussing strategic options with its works council, according to Sharma.
Microsoft launched a voluntary retirement program in April. It was the company's first such initiative.
The program targeted U.S.-based employees at the senior director level and below.
More than one-third of eligible staff accepted the offer. Coleman said Microsoft plans to explore similar programs going forward.
She added that the company is continually searching for ways to minimize the need for layoffs.
Much of Wall Street's unease centers on Microsoft's AI strategy.
Critics point to CEO Satya Nadella's lack of a clear roadmap for developing AI models and agent-based services.
Coleman said artificial intelligence is not directly responsible for the job cuts.
She acknowledged, however, that AI is changing how work gets done across the company.
Coleman said employees must continue building new skills as automation takes on more daily tasks.
She added that Microsoft's customers are facing the same transition and are relying on the company for guidance.
Visual Disclaimer: This is an AI-generated illustrative portrait. It is used for creative representation and does not depict a real-time event. Created by AD News Live.
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