Microsoft cuts around 4,800 jobs

Microsoft is cutting around 4,800 jobs, roughly 2.1% of its global workforce, with the deepest reductions landing in Xbox and commercial sales, according to TechCrunch. A memo attributed to Amy Coleman, Microsoft’s executive vice president and chief people officer, told staff the business is changing as technology and customer needs shift. Coleman also wrote that the eliminated roles are not being replaced by AI, even as AI automates parts of daily work.

The cuts add to a pattern across the industry: companies publicly frame AI as a growth story while privately reworking cost structures and headcount. TechCrunch notes Microsoft has been increasing AI spending, including launching a Frontier Company unit for enterprise AI deployments backed by a $2.5 billion investment. That spending sits alongside repeated workforce reductions: Microsoft offered voluntary separations earlier this year and carried out large layoffs last year, while saying it is trying to keep some staff through re-skilling and internal transfers.

Inside gaming, the timing is awkward. Microsoft is describing the Xbox changes as restructuring for long-term success, and TechCrunch reports four gaming studios will move under new management to preserve intellectual property and ongoing projects. At the same time, the broader games market has been tightening, while generative AI firms pitch “playable world model” demos as a new commercialization path—an argument that attracts capital even before it produces stable, shipping products.

Ny Teknik, citing the same overall 2.1% reduction, reports the Xbox division will lose 3,200 jobs—about 20% of its staff—with some cuts happening immediately and additional reductions planned next year. Asha Sharma, described by Ny Teknik as head of Xbox, told employees the restructuring will take a year and bring further challenges.

Microsoft says the jobs are not being replaced by AI. It is simultaneously spending billions to make AI central to how work gets done.