Microsoft Cuts 4,800 Jobs, Overhauls Xbox Division

Sharma, a former Instacart executive who took over from longtime chief Phil Spencer in February, described the division's business as "not healthy", citing profit margins she said were three to ten times lower than those of rivals. Xbox has endured repeated cuts since Microsoft's $68.7bn acquisition of Activision Blizzard closed in 2024, and the company acknowledged that its Game Pass subscription service had not grown as expected. More broadly, Amy Coleman, Microsoft's chief people officer, tied the layoffs to a fast-changing industry as the firm pours tens of billions of dollars into artificial intelligence. She insisted the cut roles were "not being replaced by AI", though she conceded that automation is reshaping how work is done.

The announcement is the latest in a string of technology-sector layoffs; the executive coaching firm Challenger, Gray & Christmas counted 52,050 tech job cuts in the first quarter of 2026, a 40% jump from a year earlier. Some affected studios struck a hopeful tone: Double Fine and Compulsion will return to independent ownership, keeping their intellectual property, while Ninja Theory and Undead Labs have agreed terms with new backers. Industry analyst Piers Harding-Rolls said the reshuffle underlines Xbox's focus on its biggest franchises, and the studios behind Minecraft and Candy Crush will now report directly to Sharma. Microsoft shares slipped about 1.5% on Monday. Sharma has pledged to return Xbox to growth by 2027, writing: "History is full of companies that mistake longevity for inevitability. We will not be one of them."