Microsoft Cuts 4,800 Jobs With Xbox Restructuring And Studio Spin‑Offs

Microsoft announced on July 6, 2026, that it is cutting 4,800 jobs worldwide, representing about 2.1% of its global workforce, as part of a major restructuring effort, the company and industry sources reported.

The layoffs will affect multiple divisions, with a significant portion coming from the Xbox gaming unit and commercial sales teams. Around 1,600 Xbox positions were eliminated immediately, while the division plans to reduce its workforce further during the current fiscal year.

Xbox leadership, including CEO Asha Sharma, described the move as part of a business “reset” aimed at strengthening the unit’s financial performance amid stiff competition and challenging profit margins.

As part of the changes, Microsoft is planning to spin off several game development studios that were previously part of the Xbox portfolio. Some studios, including well‑known teams, will return to independent operation or transition under new ownership, as the company rethinks its long‑term gaming strategy.

Microsoft emphasized that these job cuts are not directly due to artificial intelligence replacing workers, but reflect an evolving business that must adapt to shifts in technology, market demands and investment priorities.

The broader layoffs come as the tech giant continues massive spending in artificial intelligence infrastructure, while monitoring its core sales and gaming divisions for long‑term sustainability.

Source: CNBC