Microsoft Cuts 4,800 Jobs, Overhauls Xbox Unit Amid AI Shift

Microsoft MSFT is cutting about 4,800 jobs, roughly 2% of its global workforce, in its deepest restructuring of the Xbox gaming division to date . The plan includes shedding about 3,200 gaming-related roles over the coming fiscal year, spinning off or selling four game studios, and placing a fifth studio under review that could lead to closure.

The cuts confirm and sharpen an earlier report from July 1 that had described an 'upcoming round' of layoffs affecting Xbox and sales units without specifying scale; Monday's announcement supplies the hard numbers. Microsoft has framed the restructuring as part of a broader effort to redirect spending toward AI after several consecutive quarters of heavy AI infrastructure investment.

The move extends a string of mass layoffs across Big Tech this year as companies look to fund AI compute and data-center buildouts partly by trimming headcount elsewhere in the business. For Xbox specifically, the studio divestitures signal Microsoft is narrowing its first-party gaming ambitions rather than continuing the acquisition-led expansion that defined the unit over the past several years.

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