Microsoft lays off nearly 5,000 employees, with Xbox and commercial sales hit hardest
Microsoft cut about 4,800 roles on Monday, equivalent to 2.1% of its global workforce, in its latest round of layoffs. The most affected divisions are Xbox, which lost 1,600 employees, and commercial sales, raising concerns about AI replacing jobs.
Microsoft announced the layoff of approximately 4,800 employees on July 6, 2026, representing 2.1% of its total workforce. According to internal memos, the cuts primarily impact the Xbox and commercial sales divisions, with Xbox alone losing 1,600 staff members.
Amy Coleman, Executive Vice President and Chief People Officer, explained in a memo that the business is changing due to rapid technological advancements. She emphasized that the eliminated roles are not being replaced by artificial intelligence, but acknowledged that AI is transforming how work is done and automating certain tasks.
Asha Sharma, CEO of Xbox, described this as "the most significant restructure in Xbox history." She stated that the business is currently unhealthy, with profit margins 3 to 10 times lower than comparable platform and publishing businesses. Sharma also noted that the industry is facing the most severe hardware crisis in history, requiring a reset for Xbox.
As part of the restructuring, Xbox plans to flatten its management structure from 14 layers to no more than five, ideally three. Four gaming studios will be transitioned: Compulsion Games and Double Fine Productions will return to independent status, while Ninja Theory and Undead Labs will come under new ownership with funding to complete and expand their popular games. The company will focus on core strategic pillars like Minecraft and Candy Crush.
These layoffs are part of a broader trend in the tech industry, which saw approximately 154,000 job losses in the first half of 2026, including at major companies like Meta, Oracle, Amazon, and Cognizant. Last year, Microsoft laid off about 15,000 employees in two rounds. In April, the company offered buyouts to an undisclosed number of employees.
Microsoft stated that it is also working to retain staff through reskilling and redeployment. Over the past year, more than 4,000 employees have been moved into new roles, including 500 this month.
