Microsoft lays off nearly 5,000 employees across Xbox, commercial sales

Microsoft cut around 4,800 roles, or 2.1% of its global workforce, in a move that is stoking fears that AI will replace people at companies. The layoffs hit Xbox and commercial sales the hardest, with Xbox losing 1,600 staffers immediately. In a memo, Amy Coleman, EVP and chief people officer, stated that the company's business is changing because the world around it is changing, and that the company needs to adjust resources and roles to have the greatest impact for customers. Coleman stressed that the roles being eliminated are not being replaced by AI, but noted that AI is changing how work gets done and that employees need to keep learning and adapting. The layoffs build on Microsoft's recent launch of its Frontier Company business unit, which is focused on enterprise AI deployments and backed by a $2.5 billion investment, reflecting a trend of job cuts correlating with increased AI spending. Asha Sharma, CEO of Xbox, called this "the most significant restructure in Xbox history" in an email to employees. She stated that Xbox's business is not healthy, operating at margins 3–10 times lower than comparable businesses, and that previous strategies like Game Pass did not grow at the expected pace. Sharma said a reset is necessary as the industry faces its most severe hardware crisis, and as part of the shift, Microsoft will transition four of its gaming studios to operate under new management.