Microsoft lays off 9000 employees, Xbox division hit hard

Microsoft has announced plans to lay off approximately 9000 employees, affecting less than 4% of its global workforce across various teams and locations. The decision marks another round of layoffs as the company aims to streamline its structure at the start of its 2026 fiscal year. The Redmond-based software giant typically initiates organizational reshuffles around the beginning of each fiscal cycle.

We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace, — a Microsoft spokesperson.

The gaming division is among the most significantly impacted. Bloomberg reported that employees in Microsoft’s gaming sector, including the Xbox team, were informed of job cuts Wednesday morning. Specifically, Microsoft's Stockholm-based King division — known for the popular game Candy Crush — is reducing its workforce by approximately 10%, amounting to around 200 job cuts. Additional layoffs within European gaming offices have also been confirmed, with further notifications expected for U.S. units later in the day.

Phil Spencer, CEO of Microsoft Gaming, addressed the layoffs in an email to employees, stating:

I recognize that these changes come at a time when we have more players, games, and gaming hours than ever before. Our platform, hardware, and game roadmap have never looked stronger. The success we're seeing currently is based on tough decisions we've made previously. We must make choices now for continued success in future years and a key part of that strategy is the discipline to prioritize the strongest opportunities.

This marks the fourth round of cuts within Xbox in the past 18 months. Last year, Microsoft eliminated nearly 2000 gaming jobs across Xbox and Activision Blizzard, also closing three ZeniMax game studios following their acquisition in 2021. These developments come as part of Microsoft’s ongoing integration efforts after its $69 billion acquisition of Activision Blizzard in October 2023.

The current move follows multiple rounds of job cuts earlier this year. Microsoft previously laid off fewer than 1% of its workforce in January, based on performance reviews. In May, the company cut over 6000 employees, followed by another 300 positions eliminated in June. As of June 2024, Microsoft employed approximately 228000 people globally. In 2023, the company had already reduced its workforce by 10000.

As with the May layoffs, Microsoft is looking to streamline its management structure by reducing the number of layers between top executives and individual contributors.