Microsoft announces new layoffs today, cutting 4% of its workforce
Microsoft is making a new round of deep cuts to its workforce, eliminating 9,000 jobs company-wide. The company began notifying employees of the layoffs, which will shrink the company by 4%, on Wednesday morning.
While not limited to its gaming divisions, Microsoft’s latest cuts will impact its Xbox business. In a message to his staff, Xbox lead Phil Spencer announced that the company would “end or decrease work in certain areas of the business” and that the layoffs were designed to position the gaming division for future success.
In Spencer’s memo, reported by The Verge, the head of Xbox said that his department would “follow Microsoft’s lead in removing layers of management to increase agility and effectiveness.” Microsoft-owned King, the Stockholm-based mobile game studio behind Candy Crush, will also lose 200 jobs amounting to 10% of its staff, Bloomberg reports.
In June, Bloomberg reported that major layoffs to Microsoft’s sales teams and gaming departments were looming as the fiscal year wrapped up.
The cuts keep coming
Microsoft’s new job losses follow layoffs in May and June that together culled 6,000 positions.
According to Washington employment filings, software engineers bore the brunt of the May cuts, accounting for more than 40% of 2,000 jobs eliminated in the state.
In June, Microsoft’s cuts focused on software engineers, product management and product marketing, technical program managers, and legal staff. When Microsoft last reported its numbers last year, the company had 228,000 employees.
In its April quarterly earnings call, Microsoft CFO Amy Hood said that the company planned to refocus on agile teams by “reducing layers with fewer managers.” In spite of that goal, in a round of layoffs the following month, only 17% of roles eliminated were classified as management.
Microsoft’s spending spree continues
Microsoft’s flurry of layoffs is terrible news for employees, but a glance at its share price makes it clear that the company itself is feeling fine. With its stock soaring, AI projects booming, and executive compensation spiking to eye-watering new heights, Microsoft is looking to further supercharge its business, not to course correct.
Through aggressive layoffs, the company aims to balance out its splashy recent spending, including new plans to invest $80 billion into AI-powered data centers in the 2025 fiscal year. Beyond its big AI bets, Microsoft’s gaming business is still under pressure to cut costs related to the company’s $69 billion deal to buy Activision Blizzard, which closed two years ago.
Between spending big on AI and leveraging the technology in its operations, it’s no secret that artificial intelligence is already taking a bite out of Microsoft’s human workforce. Earlier this year, Microsoft CEO Satya Nadella said that as much as 30% of the company’s code is now written by AI rather than humans.
“Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” Nadella said in the company’s April earnings report.
The new round of layoffs is Microsoft’s deepest single cut to its workforce since 2023, when it eliminated 10,000 jobs. Microsoft’s 2025 layoffs together have eclipsed that number, with 15,000 employees losing their jobs this year so far.