Microsoft is implementing widespread layoffs not only in the Xbox organization but also in other business units as part of a restructuring announced this week . The company announced it will lay off approximately 3,200 employees in its Commercial Business division . This brings the total number of layoffs announced that day to 4,800, representing about 2.1% of Microsoft’s global workforce. While cuts at Xbox had been discussed previously, this new decision targeting the commercial business division was an unexpected development.
Microsoft’s Chief People Officer, Amy Coleman, stated in a blog post to employees that the company has undergone many transformations in the past, and this has been possible thanks to the adaptability of its employees. Following the restructuring decision, Coleman also touched upon the impact of artificial intelligence on the workforce. She specifically emphasized that the positions eliminated today will not be directly filled by AI systems. Nevertheless, she noted that productive AI technologies are changing the way work is done, some tasks are becoming automated, and employees need to adapt to this transformation by acquiring new skills.
The restructuring continues on the Xbox side.
Microsoft’s gaming division continues to be a significant part of this restructuring process. The company is initially laying off approximately 1,600 employees in the Xbox organization, with a similar number of additional layoffs planned for the coming months. Additionally, preparations are underway to make Compulsion Games, Double Fine, Ninja Theory, and Undead Labs studios independent entities. The future of Arkane studio remains unclear, and its closure is reportedly being considered.
These developments are not entirely surprising to Xbox employees. In June, an internal memo sent to employees by Xbox CEO Asha Sharma and Chief Operating Officer Matt Booty stated that the organization’s growth strategy in recent years was unsustainable. The memo specifically mentioned that major studio acquisitions over the past decade had significantly increased the organization’s scale, while the underperformance of current-generation Xbox hardware had increased financial pressure. In a new statement released on July 6th, Sharma reiterated similar assessments and shared the reasons for the restructuring in more detail.
Prior to the layoffs, employees organized under the Communications Workers of America (CWA) within Xbox had also called on Microsoft. Union representatives had requested that company management engage in good-faith negotiations with employee representatives regarding job security and potential layoffs. Despite this, the announced decisions indicate that the expected restructuring is being implemented as planned.
Microsoft has made several large-scale layoff decisions in recent years. In July 2025, the company parted ways with a total of 9,000 employees across various business units, with the Xbox organization also experiencing hundreds of job losses. Prior to that, approximately 1,900 Xbox employees were laid off at the beginning of 2024. These latest cuts reveal Microsoft’s ongoing efforts to control operational costs and restructure its organizational structure. On the other hand, the company’s continued investment in artificial intelligence suggests that discussions about how business processes and employee profiles will change in the future will remain on the agenda.
