Microsoft cuts 4,800 jobs, restructures Xbox amid AI spending push

Microsoft announced 4,800 job cuts globally, the largest Xbox restructuring in its history. Of those, 3,200 are from the gaming division, with 1,600 employees leaving immediately and more expected in coming months. Four studios are being separated: Compulsion Games and Double Fine become independent again, while Ninja Theory and Undead Labs will be acquired by new owners. Arkane Studios is also reviewing strategic options in France. Microsoft says no announced first-party games will be canceled.

Xbox CEO Asha Sharma described the division's business as 'not healthy,' with margins 3–10x lower than comparable platforms. The company is reducing leadership layers, creating a new COO role, and promoting Helen Chiang to oversee content, hardware, and services. While the cuts are not directly replacing jobs with AI, Microsoft continues heavy AI investment—forecasting $190 billion in spending for 2026, largely for infrastructure. Analysts see the restructuring as a pivot from aggressive studio acquisitions toward operational efficiency and profitability.