Microsoft to lay off hundreds in Xbox division amid restructuring push

Microsoft is reportedly planning another round of layoffs next week, this time targeting its Xbox gaming division. The tech giant is expected to cut hundreds of jobs as it continues to realign its workforce and resources, according to media reports. The layoffs mark the fourth major round of job cuts since early 2023 and come as the company enters the final stretch of its fiscal year, ending June 30.

Read more: Microsoft slashes hundred more jobs in another round of layoffs

While Microsoft has not officially confirmed the exact number of roles impacted, the decision is said to be part of a broader restructuring following the company’s $69 billion acquisition of Activision Blizzard. The gaming unit, including Xbox Game Studios, ZeniMax, and Activision Blizzard, has already seen over 1,900 job cuts earlier this year, and this new round will further streamline operations in pursuit of improved profitability.

The company has also made deep cuts in other departments this year, including over 6,000 layoffs across sales, customer support, and engineering teams in May, followed by another 300-plus roles eliminated in early June. These reductions come as Microsoft ramps up investments in artificial intelligence, cloud infrastructure, and data center expansion. The company has earmarked over $80 billion in capex toward AI-related growth over the coming years.

These represent the company’s second-largest set of layoffs since 2023, when it eliminated 10,000 jobs in a single wave.

Read more: Satya Nadella explains Microsoft layoffs: Not a performance issue

CEO Satya Nadella has previously characterized the layoffs as necessary for realignment rather than a reflection of performance. In past statements, the company said it continues to evaluate strategic priorities and reallocate talent toward areas of growth.

In May, Nadella shed light on the company's decision to lay off around 6,000 employees—roughly 3% of its global workforce—stressing that the move was not a reflection of employee performance but rather a strategic realignment to prepare for a rapidly shifting tech landscape. Addressing employees at a company-wide town hall, Nadella clarified that the layoffs stem from a broader organisational restructuring aimed at positioning Microsoft as a leader in artificial intelligence. “This was about reorganisation rather than performance,” he said, signalling that the company’s workforce reshuffle is designed to support its long-term AI ambitions.

Read more: Microsoft lays off 6,000 in AI restructuring drive; director speaks out

These developments are also part of a broader trend across the tech sector in 2025, where companies like Amazon, Meta, and Intel have announced large-scale layoffs in response to slowing growth in traditional segments and a strategic pivot toward AI and automation.