Microsoft has expanded its latest round of workforce reductions far beyond its gaming division, cutting 3,200 jobs in divisions outside of Xbox on Monday in what is shaping up to be one of the company’s largest single-day layoff events. The cuts primarily target the organization’s Commercial Business segment and come on top of a substantial — though widely anticipated — firing spree that hit Microsoft’s Xbox arm on the same day.
4,800 Jobs Eliminated in a Single Day
Combined, Microsoft is letting go of 4,800 employees across Xbox and other divisions today, representing approximately 2.1 percent of its global workforce. The Xbox division alone accounts for 1,600 of those immediate layoffs, with an additional 1,600 firings expected over the coming months.
The Commercial Business cuts were announced internally by Microsoft EVP and Chief People Officer Amy Coleman, who framed the reductions as part of the company’s ongoing cycle of reinvention.
“During my time at Microsoft, I’ve seen this company reinvent itself again and again. What makes that possible has always been our people — their resilience, creativity, and willingness to keep learning.”
The AI Question Looms Large
While Coleman explicitly stated that AI will not immediately replace the eliminated positions, her messaging strongly hinted that automation could reshape these roles in the near future.
“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.”
The statement reflects a delicate balancing act for the tech giant, which has invested billions in AI infrastructure and tools through its partnership with OpenAI while simultaneously reducing headcount across traditional business units.
Xbox Restructuring: Studios Sold, Teams Reduced
The Xbox layoffs, while expected, are no less dramatic. In addition to reducing its workforce, Microsoft is spinning off four studios — Compulsion Games, Double Fine, Ninja Theory, and Undead Labs — and potentially shuttering a fifth, Arkane.
These moves follow a sobering internal memo sent by new Xbox CEO Asha Sharma and COO Matt Booty on June 10, warning employees that after a decade of massive studio acquisitions and underwhelming current-gen hardware sales, the Xbox division was over-extended and losing money.
Unionized Xbox employees represented by the Communications Workers of America had urged Microsoft just one week before the cuts to engage in good-faith negotiations around job security and layoff processes.
A Pattern of Workforce Reductions
Monday’s cuts are part of an ongoing trend at Microsoft. The company laid off 9,000 employees across its divisions in July 2025, including hundreds of Xbox staff, and cut 1,900 Xbox employees in early 2024.
The latest round signals that Microsoft’s restructuring efforts are far from over, as the company continues to grapple with the financial realities of its massive gaming acquisitions — including the $68.7 billion Activision Blizzard deal — while pivoting aggressively toward AI-driven products and services.
For affected employees, the coming months will involve navigating severance packages and, in some cases, the transition of their studios to new ownership. For the broader tech industry, Microsoft’s ongoing cuts serve as another reminder that even the world’s most valuable companies are not immune to the pressures of over-expansion and shifting strategic priorities.