Microsoft cuts 4,800 jobs, restructures Xbox

Microsoft announced on July 6, 2026, that it is cutting approximately 4,800 jobs, about 2.1% of its global workforce, as part of a major restructuring to reduce costs and accelerate its push into artificial intelligence. The layoffs heavily impact the Microsoft — Xbox gaming division, with 3,200 positions eliminated over fiscal 2027, including 1,600 immediate cuts. Four game studios—Xbox Game Studios — Compulsion Games, Xbox Game Studios — Double Fine, Xbox Game Studios — Ninja Theory, and Xbox Game Studios — Undead Labs—are being spun off or sold, while ZeniMax Media — Arkane Studios is under review. Microsoft's Chief People Officer Darby Coleman stated the roles are not being replaced by AI but acknowledged AI is changing work. The company is investing heavily in AI, with a $190 billion capital expenditure forecast for 2026 and a $2.5 billion initiative to embed engineers in enterprise clients. Microsoft's shares fell nearly 23% in the first half of 2026. The layoffs follow earlier buyouts offered to 9,000 U.S. employees. Microsoft — Xbox CEO Asha Sharma described the gaming business as 'not healthy' with margins 3-10x lower than competitors. The restructuring aims to return Microsoft — Xbox to growth by 2027.