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Microsoft is back in the headlines with another wave of job cuts, this time affecting around 9,000 employees, or nearly 4% of its global workforce.
The announcement marks one of the company’s biggest rounds of layoffs in recent memory and adds to a growing list of internal shakeups over the past year.
While the layoffs span across departments and regions, one area is taking a particularly hard hit: Microsoft Gaming. That includes some of the company’s most high-profile subsidiaries, Xbox, ZeniMax, King (makers of Candy Crush), and Turn 10 Studios, known for the Forza Motorsport franchise.
What’s behind the layoffs?
In a statement quoted by CNBC, a Microsoft spokesperson said the company is making “organizational changes necessary to best position the company and teams for success in a dynamic marketplace.”
Internally, sources say the company is aiming to “flatten management layers” to make teams more agile and efficient.
Phil Spencer, the CEO of Microsoft Gaming, sent a memo to employees confirming that roles in the gaming division are being cut. His message hinted at a long-term strategy: trimming down now to focus resources on the strongest growth opportunities in the future.
“We will end or decrease work in certain areas… and remove layers of management to increase agility and effectiveness,” Spencer wrote.
That means some titles even those with high fan anticipation are being shelved. Perfect Dark and Everwild, two in-development Xbox exclusives, have reportedly been cancelled.
The studio behind Perfect Dark, The Initiative, is said to be shutting down altogether. Over 70 roles have also been eliminated at Turn 10.
Cuts and restructuring
This latest move is just the latest in a string of layoffs that began as early as January 2024. Over the last 18 months, Microsoft has trimmed more than 15,000 roles. That includes:
January 2024: 1,900 layoffs across Activision Blizzard and Xbox
May 2025: 6,000+ roles eliminated
June 2025: An additional 305 layoffs
Now, July 2025: Another 9,000 jobs slashed
Cuts have also hit other divisions like Azure (cloud), HoloLens (mixed reality), and broader corporate functions.
The human impact it has
Though Microsoft has emphasized that the layoffs are about “business agility,” the effects on employee morale are significant.
Current and former employees have voiced concerns over repeated job cuts, even as the company continues to post strong financials and expand into new markets.
Spencer acknowledged the emotional weight of the layoffs in his memo, saying, “We would not be where we are today without the time, energy, and creativity of those whose roles are impacted.”
Microsoft says it is offering severance packages, extended healthcare, and job placement support. Impacted employees are also being encouraged to apply for open roles across other Microsoft teams, with their applications prioritized.
What’s next?
Microsoft’s latest moves show that even tech giants aren’t immune to hard decisions in uncertain economic times.
While the company is still a dominant player in cloud computing, AI, and gaming, its strategy seems to be narrowing focusing more on core strengths and less on sprawling innovation.
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