Microsoft said Monday it is eliminating 4,800 jobs, about 2.1% of its global workforce, with the cuts concentrated in its sales organization and Xbox division as part of what gaming chief Asha Sharma called the most significant restructuring in Xbox’s history.
Of the total cuts, 1,600 took effect immediately within Xbox, according to CNBC. Sharma told division employees that total gaming job reductions will reach approximately 3,200 by the end of the next fiscal year, roughly 20% of Xbox’s global workforce, according to a person familiar with the matter cited by CNBC who was not authorized to discuss internal changes publicly.
Sharma said Xbox’s business is “not healthy,” citing profit margins running three to ten times lower than comparable platform and publishing businesses, with some studios losing 64 cents for every dollar invested, according to GeekWire. “History is full of companies that mistook longevity for inevitability,” Sharma wrote in an email to staff. “Xbox will not be one of them.”
Four Xbox studios are exiting the division as part of the overhaul. Compulsion Games and Double Fine Productions will become independent studios, while Ninja Theory and Undead Labs are moving to new ownership, according to multiple reports. Mojang Studios and King, maker of Candy Crush, will report directly to Sharma going forward, reflecting what the company described internally as their geographic, demographic and platform differentiation value.
Amy Coleman, Microsoft’s chief people officer, wrote in a separate companywide memo that the roles being eliminated are not being replaced by artificial intelligence, though she said automation is reshaping workflows across the company. “The way technology is built, deployed, and used is transforming faster than at any point in my time here,” Coleman wrote, according to CNBC.
The cuts follow a voluntary retirement program Microsoft offered to roughly 9,000 eligible U.S. employees, about 7% of its domestic workforce, in recent weeks. Coleman said approximately 30% of eligible employees accepted the offer, in line with the company’s expectations, reducing the scale of Monday’s announced reductions. She said the company is also exploring making voluntary exit programs a recurring option rather than a one-time offer.
Microsoft has been the worst-performing megacap technology stock so far in 2026, falling roughly 19% to 23% depending on the measurement period, as investors weigh concerns that generative AI could displace enterprise software demand against Microsoft’s own AI products, which have not yet matched that growth. The company has said it plans to spend approximately $190 billion on infrastructure and data centers in 2026. Microsoft shares slipped about 1% in Monday trading while the Nasdaq Composite advanced 1%.
Monday’s cuts follow more than 15,000 job reductions across two rounds of layoffs in 2025. Coleman did not signal further companywide layoffs but described a broader ongoing shift in how Microsoft manages its workforce, including redeploying staff into customer-facing and AI-focused roles; more than 4,000 employees have been redeployed internally over the past year, according to GeekWire.
