Microsoft Cuts 4,800 Jobs, Reshapes Xbox Division

Sharma, who replaced longtime boss Phil Spencer in February, called the division "not healthy". She said its profit margins were three to ten times lower than those of rivals. Xbox has faced repeated cuts since Microsoft's $68.7bn purchase of Activision Blizzard closed in 2024, and the company admitted its Game Pass subscription service had grown more slowly than hoped. Microsoft is also pouring tens of billions of dollars into artificial intelligence (AI). Executives insisted the lost roles were "not being replaced by AI", but agreed that automation is changing how work is done.

The cuts are part of a wider wave across the technology sector. One consulting firm counted 52,050 tech job losses in the first quarter of 2026, a 40% rise on the year before. Some studios sounded hopeful: Double Fine and Compulsion will become independent again and keep their creative work, while Ninja Theory and Undead Labs have found new owners. Microsoft shares slipped about 1.5% on Monday. Sharma has promised to return Xbox to growth by 2027.