Microsoft is cutting 4,800 jobs, representing approximately 2.1% of its global workforce. The layoffs will hit commercial sales and the Xbox gaming group the hardest, following a nearly 23% slump in the company's shares during the first six months of 2026.
The Xbox division is undergoing the most significant restructure in its history. Initial cuts include 1,600 workers, with a total of about 3,200 gaming jobs expected to be eliminated over the coming fiscal year. This reorganization includes the closure of five studios, two of which are located in Europe.
Xbox CEO Asha Sharma stated that the business is not healthy, noting that margins are 3 to 10 times lower than comparable platform and publishing businesses. Sharma cited a severe hardware crisis in the industry due to soaring costs for console components, while the unit's revenue has fallen and its subscription service has performed far below expectations.
These reductions are part of a wider effort to slash costs as Microsoft prioritizes spending on artificial intelligence. The company faces heightened competition from Sony’s PlayStation and Nintendo’s Switch as it seeks to reset its gaming business.