Microsoft is laying off 4,800 employees

Microsoft is laying off approximately 4,800 employees as it begins its new financial year, with most cuts concentrated in its commercial sales business and the Xbox gaming division, according to an internal memo obtained by The Verge [1]. The reduction represents about 2.1 percent of the company's total workforce [1]. The move follows a prior round of cuts roughly a year ago, when Microsoft eliminated around 9,100 positions [1]. Amy Coleman, Microsoft's executive vice president and chief people officer, told employees that the technology industry is changing and the company must "adjust resources and roles and shift how we operate" [1]. She directly stated that "the roles eliminated today are not being replaced by AI," while acknowledging that "AI is changing how work gets done" [1]. The Xbox division is absorbing a significant portion of the reductions. Approximately 1,600 Xbox employees are affected immediately, with plans to eliminate a total of around 20 percent of Xbox jobs by the end of the financial year [1]. The brand, which Microsoft first introduced in the United States in November 2001, has grown to encompass four main console lines, a cloud gaming service, and subscription offerings like Xbox Game Pass [8]. The current generation of hardware, the Xbox Series X and Series S, launched in November 2020 and are estimated to have sold over 35 million units worldwide as of February 2026 [9]. Microsoft is also selling off four Xbox studios and evaluating the sale of another as it attempts to reset the business [1]. Coleman said the company is working to reduce the need for job eliminations. "Over the past year, we have redeployed more than 4,000 employees into new roles, including another 500 this month," she wrote [1]. Microsoft also offered a voluntary retirement program to U.S. employees whose combined age and years of service totaled 70 or more. The package included five years of access to Microsoft's healthcare coverage and six months of vesting for unvested stock options [1]. Coleman noted that "more than 30 percent of eligible employees chose to participate" and that the company will continue exploring similar approaches [1]. "Decisions like these are never easy, and you have my commitment that we are constantly looking for ways to reduce the need for job eliminations," Coleman said [1]. The layoffs arrive as Microsoft's gaming division operates under a broader corporate structure that was reorganized in 2022, when Xbox became part of the newly formed Microsoft Gaming division alongside first-party publishers including Xbox Game Studios, ZeniMax Media, and Activision Blizzard [8].