Microsoft just handed pink slips to 4,800 employees, with its Xbox division absorbing the heaviest blow. The cuts amount to roughly 2.1% of the company’s global workforce.
Xbox CEO Asha Sharma described the move as a necessary “reset” for the gaming unit, which is staring down intensifying competition. The immediate round eliminated 1,600 Xbox positions, but the company plans to trim approximately 3,200 total roles from the division, about 20% of its gaming workforce, by the end of fiscal year 2027.
What’s actually happening inside Microsoft
This isn’t a surgical tweak. It’s a full-scale reorganization that includes potential divestitures of several gaming studios.
Microsoft’s stock has declined more than 18% year-to-date in 2026. The pressure to show returns on its massive artificial intelligence investments is clearly reshaping how the company allocates capital and headcount.
