Microsoft cuts 4,800 jobs, 3,200 at Xbox in major restructuring

Microsoft announced a global workforce reduction of about 4,800 positions, roughly 2 % of its staff, as part of a fiscal‑year transformation. The deepest impact falls on the Xbox division, where 3,200 roles – about a third of the total cuts – are being eliminated, marking the largest shake‑up in the unit’s 25‑year history.

Xbox chief executive Asha Sharma told employees the business “is not healthy,” citing profit margins far below industry peers and a costly expansion of studios that has not paid off. Four studios – Compulsion Games, Double Fine Productions, Ninja Theory and Undead Labs – will leave Xbox to become independent, while other studios such as id Software and Obsidian face severe staff reductions.

Microsoft’s communications lead Frank Shaw clarified that the layoffs are not linked to H‑1B visa hiring, stating that the visa applications are company‑wide and represent only a small percentage of the overall workforce. Sharma was later named to a Federal Reserve board overseeing employment and productivity.

The cuts have sparked a strong fan response on Xbox’s official Player‑Voice forum, where thousands of users have demanded an end to layoffs and studio closures. Industry analysts note that the moves occur alongside Microsoft’s heavy investment in artificial‑intelligence infrastructure, a trend that many tech firms describe as “continuous tuning” of workforce levels.

Overall, the restructuring aims to streamline operations, focus on core franchises, and reallocate resources toward AI‑driven products, while the immediate human impact affects thousands of developers worldwide.