Microsoft Cuts 4,800 Jobs Today - Xbox Loses 20% of Staff and Four Studios

Microsoft is cutting 4,800 jobs today - about 2.1% of its global workforce of 220,000. Xbox absorbs the worst of it. Xbox will lose roughly 3,200 positions this fiscal year, around 20% of its global headcount, and Microsoft is simultaneously selling or spinning off four game studios. About 600 of the 4,800 cuts fall in Washington state, home to Microsoft's Redmond headquarters.

Xbox CEO Asha Sharma called it in an internal memo the biggest restructuring in Xbox history. Gaming margins have been running at "3-10x lower than comparable platform and publishing businesses," with studios losing 64 cents per dollar invested. Four studios face divestiture: Ninja Theory and Undead Labs will be sold to outside buyers; Compulsion Games and Double Fine Productions will become independent studios. Arkane Studios is also under evaluation for sale or spin-off. About 1,600 Xbox positions go now; another 1,600 are expected before the end of the fiscal year.

Outside gaming, the cuts reshape Microsoft's sales and consulting division to align with last week's Microsoft Frontier launch - a $2.5 billion initiative embedding 6,000 engineers directly inside customer organizations. Traditional sales roles are shrinking as technical customer-facing positions grow. President Brad Smith framed the shift: "Some things like coding require less time of software developers. At the same time, there's new parts that are growing - whether it's product management or software design, or perhaps most importantly, working directly with customers." Replacing enterprise sales headcount with embedded engineers is not a cost-cutting move - it is a bet that demonstrating the product in the customer's environment beats selling it to them.

Chief people officer Amy Coleman said the eliminated roles do not directly replace existing workers with AI - then added that "AI is changing how work gets done." Microsoft's stock slid 30% over the past nine months, erasing roughly $1.2 trillion in market value. AI accounted for 31% of all job cuts recorded in June across the broader market. Microsoft cut more than 15,000 employees in two rounds last year; this year's smaller number reflects 4,000 internal redeployments over the past 12 months and a voluntary exit program where about 30% of eligible U.S. employees - roughly 2,600 people - accepted a package.

Coleman's memo contained a direct warning: "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." Microsoft is considering making voluntary exit programs a standing annual option rather than a one-time event. CFO Amy Hood said in April that headcount would decline year-over-year. No timeline for the remaining 1,600 Xbox cuts appeared in Monday's announcement.