Microsoft to Eliminate 4,800 Jobs as It Restructures Xbox Business

Microsoft announced plans to reduce its global workforce by approximately 4,800 employees, representing about 2.1% of its staff, as part of a major restructuring of its gaming business.

Around 3,200 of the affected roles are within the Xbox division, with 1,600 employees notified of layoffs on Monday. The company is also reshaping its gaming operations by divesting or separating several game studios.

According to Xbox leadership, Compulsion Games and Double Fine Productions will operate as independent studios. Ninja Theory and Undead Labs will also be separated to continue development of their respective franchises. In France, Arkane Studios has begun discussions with its workers' union to review possible changes.

Microsoft has invested heavily in Xbox over the years, including its acquisition of Activision Blizzard, but the business has continued to face strong competition from rival gaming platforms. The company has also shifted its strategy toward making more of its games available across multiple platforms instead of focusing mainly on console-exclusive titles.

The announcement comes as major technology companies continue investing heavily in artificial intelligence while seeking greater operational efficiency. Microsoft said the eliminated positions are not being directly replaced by AI, although the company acknowledged that AI is changing the way work is performed.

The company has also increased spending on AI infrastructure and data centers to support growing demand for its cloud and AI services, while balancing the rising costs associated with those investments.