Microsoft to Cut 9,000 Jobs, Xbox Division Hit Hardest

Microsoft is preparing to further reduce its workforce by nearly 10,000 positions, impacting approximately 4% of its global workforce of 222,000 employees. This will mark the second major wave of job cuts in 2025 following 6,000 layoffs announced in May. The recent workforce reductions, reported shortly after the fiscal year ended June 30, are part of broader restructuring efforts aimed at reducing costs and redirecting resources toward artificial intelligence (AI) and cloud services.

The latest restructuring is more comprehensive than the previous round in May 2025, which primarily targeted product and engineering roles. This time, the cuts penetrate deeper into Microsoft's organizational structure, affecting departments across sales, marketing, Azure cloud platform, HoloLens, and especially gaming divisions. Multiple teams under Xbox have been impacted, including Zenimax and mobile game publisher King (known for Candy Crush Saga).

King - acquired by Activision Blizzard in February 2016 - reportedly lost around 200 employees, representing nearly 10% of its workforce. European operations at Zenimax were also affected, though exact figures remain undisclosed. Despite widespread job cuts, Microsoft under Satya Nadella's leadership has committed to supporting affected employees through severance packages, ongoing healthcare benefits and employment transition assistance.

Microsoft's gaming division has undergone several major restructuring waves in recent years, particularly following the $billions acquisition of Activision Blizzard in 2023. Notably, in January 2024, the company reduced 1,900 positions across Xbox, Bethesda, and Activision Blizzard. Most recently, in June 2025, the tech giant allegedly cut over 300 additional roles.

Despite strong revenue growth in gaming, hardware sales are struggling. As of mid-2024, revenue from Xbox Series X and S had declined 42% compared to 2023. By early 2025, European sales reached approximately 8.3 million units, lagging behind the 10.4 million units sold for Xbox One during the same period after its launch.

This development coincides with a significant 53% increase in Microsoft's capital expenditures, reaching $21.4 billion in the third quarter of fiscal 2025 (ending March 31). The company has also set a major annual target of investing approximately $80 billion in AI infrastructure - a substantial increase from previous years. However, despite aggressive AI expansion, the tech giant faces significant challenges, particularly regarding its key partnership with OpenAI. Microsoft has invested about $13 billion in ChatGPT developer OpenAI. Now reportedly, OpenAI is considering antitrust actions due to revenue-sharing disputes as it shifts toward a profit-focused model.

Meanwhile, global companies are scaling back personnel to adopt AI-driven operations. According to layoff tracking platform data, over 61,500 tech professionals have lost jobs across more than 130 companies in 2025. Even Amazon CEO Andy Jassy recently stated that AI will gradually replace some positions to improve efficiency, though this declaration has raised employee concerns about potential job losses.