A massive Microsoft jobs purge is under way — and it’s only the beginning

With just a few months under new leadership in the gaming division, Microsoft is set to perform a significant overhaul of Xbox, including a number of job cuts in the process.

Microsoft’s Xbox is planning some major changes to the company — with some staff reductions starting as soon as Monday — under the new CEO, Asha Sharma.

‘I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done.’

Bloomberg reported that Xbox plans to lay off 3,200 workers in that division alone. Some 1,600 jobs were reportedly eliminated on Monday, and 1,600 more are planned over the next 12 months.

Planned cuts across Microsoft, including outside Xbox, on Monday amounted to 6,400 employees, according to Bloomberg.

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Finn Gomez/The Boston Globe/Getty Images

“We are still early on this journey, and there will be more changes ahead; other parts of our business will need to make similar changes,” Chief People Officer Amy Coleman wrote in a memo published on Monday.

In addition to the staff reductions, Xbox is seemingly gearing up to reverse course on several growth initiatives overseen by Sharma’s predecessor, Phil Spencer.

Xbox will reportedly sell or attempt to sell five different studios in the near future, all of which were acquired under Spencer in an attempt to grow the company.

These studios include Ninja Theory, Undead Labs, Double Fine, and Compulsion Games, with a view to sell a fifth studio based in Lyon, France, that has yet to begin the consultation process to “review potential strategic options.” Bloomberg reported this process will take longer due to strict labor laws in the country.

Sharma wrote that those acquisitions over the past decade “created meaningful value,” but “they did not grow at the pace we expected,” adding that “in a typical year” Xbox was losing 64 cents for every dollar it invested.

Sharma said that the restructuring would affect several internal studios as well, including Activision, Bethesda/ZeniMax, Blizzard, King, Mojang, and XBOX Game Studios. She emphasized the importance of Mojang (Minecraft) and King (Candy Crush) and added that they would now report directly to her as the two consistent cash cows of the company.

While many employees worry that their jobs will be replaced by artificial intelligence, especially in the tech industry, Coleman addressed this issue head-on: “I also want to be direct that the roles eliminated today are not being replaced by AI. At the same time, what is true is that AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves.”

This announcement comes just months after Microsoft’s first-ever buyout program for retirement-age employees in the United States. Coleman’s announcement reported that 30% of eligible employees chose to participate in the program. In April, CNBC reported that there were roughly 125,000 U.S. Microsoft employees as of June 2025 and that about 7% of the workforce was eligible for this one-time program.

Assuming these figures are accurate, this program may have bought out up to around 2,600 more employees earlier this year.

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