Microsoft cuts 4,800 jobs, divests several game studios as company prioritizes AI
The gaming unit is spinning off four studios and shifting management as Microsoft says the cuts are meant to improve profitability and focus on core franchises.
- On Monday, July 6, 2026, Microsoft announced roughly 4,800 company-wide layoffs, with about 1,600 immediate Xbox cuts as part of a significant organizational restructuring aimed at restoring profitability by 2027.
- Xbox CEO Asha Sharma described the division's business as 'unhealthy,' citing margins 3–10x lower than peers and heavy content and hardware investments that failed to generate expected growth.
- The company will spin off Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs, while flattening management layers from 14 to no more than 5 and promoting Helen Chiang as Chief Operating Officer.
- France-Based Arkane Studios is entering a legally required consultation period with its Works Council to review strategic options, as the division targets 3,200 total job reductions throughout the fiscal year.
- Amid record capital spending on AI infrastructure, Microsoft is shifting investment toward priority franchises like Minecraft and Elder Scrolls, aiming for long-term growth despite current hardware challenges and market pressures.
528 Articles
528 Articles
Microsoft has once again announced layoffs. This time, employees in the company's sales and gaming divisions have been laid off. Artificial intelligence is being cited as the primary reason behind this.
Novinky.cz
Microsoft will immediately cut 4,800 jobs, or 2.1 percent of its global workforce, as the company reorganizes its Xbox gaming division and divests up to five studios to boost revenue after years of heavy investment in the division, the company announced in an email to employees on Monday and later tweeted by Xbox chief Asha Sharma.
A good two percent of employees will be laid off. The Xbox gaming division's strategy of acquiring development studios and the Game Pass service has not worked.
Microsoft is rebuilding its gaming division, talking about the "most important restructuring" of Xbox history. Practically, that means four studios and several thousand jobs are falling away.
Coverage Details
Bias Distribution
- 54% of the sources are Center
Factuality
To view factuality data please Upgrade to Premium
