Microsoft's largest layoff in years hits Xbox, sales and other divisions
[July 03, 2025] By
MATT O'BRIEN
Microsoft says it is laying off about 9,000 workers, its second mass
layoff in months and its largest in more than two years.
The tech giant began sending out layoff notices Wednesday that hit the
company's Xbox video game business and other divisions.
Among those losing their jobs are 830 workers tied to Microsoft's
headquarters in Redmond, Washington, according to a notice sent to state
officials Wednesday.
Microsoft said the cuts will affect multiple teams around the world,
including its sales division, part of “organizational changes" needed to
succeed in a "dynamic marketplace.” The company won’t say the total
number of layoffs except that it was about 4% of the workforce it had a
year ago.
A memo to gaming division employees Wednesday from Xbox CEO Phil Spencer
said the cuts would position the video game business “for enduring
success and allow us to focus on strategic growth areas.”
Xbox would “follow Microsoft’s lead in removing layers of management to
increase agility and effectiveness,” Spencer wrote.
Microsoft employed 228,000 full-time workers as of June 2024, the last
time it reported its annual headcount. Its latest layoffs would cut
fewer than 4% of that workforce, according to Microsoft. But it has
already had at least three layoffs this year and it's unlikely that new
hiring has matched the amount lost. Either way, a 4% cut would amount to
somewhere in the range of 9,000 people.
Until now, this year's biggest layoff was in May, when Microsoft began
laying off about 6,000 workers, nearly 3% of its global workforce and
its largest job cuts in more than two years.
The cutbacks come as Microsoft continues to invest huge amounts of money
in the data centers, specialized computer chips and other infrastructure
needed to advance its AI ambitions. The company anticipated those
expenses would cost it about $80 billion in the last fiscal year. Its
new fiscal year began Tuesday.
Microsoft just last month cut another 300 workers based out of its
Redmond headquarters, on top of nearly 2,000 who lost their jobs in the
Puget Sound region in May, most of them in software engineering and
product management roles, according to information it sent to Washington
state employment officials.
Microsoft’s chief financial officer Amy Hood said on an April earnings
call that the company was focused on “building high-performing teams and
increasing our agility by reducing layers with fewer managers.”
[to top of second column] |
A Microsoft sign and logo are pictured at the company's
headquarters, Friday, April 4, 2025, in Redmond, Wash. (AP
Photo/Jason Redmond, File)
 The company has repeatedly
characterized its recent layoffs as part of a push to trim
management layers, but the May focus on cutting software engineering
jobs has fueled worries about how the company's own AI code-writing
products could reduce the number of people needed for programming
work.
Microsoft CEO Satya Nadella said earlier this year that “maybe 20,
30% of the code” for some of Microsoft’s coding projects “are
probably all written by software.”
The latest layoffs, however, seemed centered on slower-growing areas
of the company's business, said Wedbush Securities analyst Dan Ives.
“They’re focused more and more on AI, cloud and next-generation
Microsoft and really looking to cut costs around Xbox and some of
the more legacy areas,” Ives said. “I think they overhired over the
years. This is Nadella and team making sure that they’re keeping
with efficiency and that’s the name of the game in Wall Street.”
The trimming of the Xbox staff follows Microsoft's years-long
expansion of the business surrounding its gaming console,
culminating in 2023 with the $75.4 billion acquisition of Activision
Blizzard — the California-based maker of hit franchises like Call of
Duty and Candy Crush.
Before that, in a bid to compete with Sony’s PlayStation, it spent
$7.5 billion to acquire ZeniMax Media, the parent company of
Maryland-based video game publisher Bethesda Softworks.
Many of those game studios, which have locations across North
America and Europe, were struggling with the layoffs Wednesday,
according to social media posts from employees who announced they
were looking for new jobs.
All contents © copyright 2025 Associated Press. All rights reserved
 |
