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Microsoft plans to cut thousands of jobs next week across sales, consulting and its Xbox gaming division, Business Insider reported Tuesday. The reductions would land days after the June 30 close of the company's fiscal year, when Microsoft has announced layoffs before. The round would affect less than 2.5% of the workforce. That is smaller than last year, when the company cut more than 15,000 jobs across two rounds.
Key Takeaways
- Microsoft plans to cut thousands of jobs as soon as next week across sales, consulting and Xbox, less than 2.5% of its workforce, Business Insider reported.
- The round is smaller than the 15,000-plus jobs cut last year and lands as AI and cloud spending tops $100 billion this fiscal year.
- A first-ever voluntary buyout, taken by about a third of 9,000 eligible U.S. staff, let Microsoft shrink the layoff share.
- Xbox faces the deepest pressure: a June 10 'reset' memo, a 3% margin, and a union demanding layoff protections.
AI-generated summary, reviewed by an editor. More on our AI guidelines.
GeekWire confirmed the plan with a person familiar with it. Microsoft declined to comment. Reuters said it could not independently verify the report. One person told Business Insider that some affected employees would be offered new roles right away.
Microsoft is on pace to spend more than $100 billion this fiscal year building AI and cloud infrastructure, up from $88.7 billion the year before, with about two-thirds going to the chips that power AI, GeekWire reported.
The company had already taken a step to limit the cuts. Earlier this year it offered its first-ever voluntary retirement program to U.S. employees at level 67 and below whose age and years of service added up to 70 or more. About a third of the roughly 9,000 eligible employees took the buyout, according to people familiar with the plan, which let Microsoft reduce a smaller share of its workforce through layoffs than it did a year ago. Sales employees on commission-based pay were excluded from the offer, according to an internal document viewed by Business Insider.
U.S. technology companies have announced 123,653 job cuts so far in 2026, according to the outplacement firm Challenger, Gray & Christmas. That is up 66% from the same period in 2025. In May, AI was the most commonly cited reason for cuts across all sectors, the firm said, the third month running that it led the list. The 38,579 reductions tied to AI that month were the most since Challenger began tracking the cause in 2023.
Investors have questioned whether that spending will pay off. Microsoft shares closed Tuesday at $373.02, down 19% over the past month and near a 52-week low, the stock's worst month since the dot-com era, according to Business Insider. Wall Street has also pressed the company over the prospect that cheaper AI tools could displace some of the software services it sells.
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Xbox and the June 10 memo
The gaming cuts were signaled weeks ago. On June 10, new Xbox chief executive Asha Sharma and content head Matt Booty sent employees a memo calling for a "reset" of the business, which the company posted publicly. Excluding the Activision Blizzard King acquisition, the two wrote, Xbox has spent more than $20 billion over five years on content, platform and hardware subsidies while its annual revenue fell by nearly half a billion dollars. The division will end the fiscal year at about a 3% "accountability margin," an internal profitability measure, down from a year earlier. "Going forward, this cannot continue," Sharma and Booty wrote.
Gaming revenue fell 7% to $5.3 billion in the quarter that ended March 31, Microsoft's most recent quarterly filing showed, with Xbox hardware revenue down 33% on lower console sales.
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The union's response
The Communications Workers of America has demanded immediate bargaining ahead of the expected cuts. The union says it represents more than 3,500 Microsoft gaming workers who have organized since 2022. On a June 29 press call, District 9 vice president Frank Arce said the company had the resources to keep its teams intact. "The money is there," he said. "Leadership is simply choosing where it goes and who pays." Sherveen Uduwana, treasurer of United Video Game Workers, noted that Microsoft chief executive Satya Nadella made about $96 million in the last fiscal year and that Microsoft had raised console prices for the third time since 2025.
A Microsoft spokesperson said the company respects "the right of our team members to make their voices heard," pointed to a "long track record of good faith partnership" with the union, and said it is continuing to negotiate agreements across Xbox.
Microsoft is expected to announce the layoffs as soon as next week, Business Insider said. Bloomberg has reported that the company is preparing to close multiple studios if no buyers are found, and GamesBeat and GamesIndustry.biz have named Double Fine, Compulsion Games and Ninja Theory among those facing closure or sale, with The Verge reporting that Ninja Theory has told staff it is looking for a buyer. The Information reported that Microsoft is weighing options for the gaming unit that include spinning it off or running it as a wholly owned subsidiary.
Frequently Asked Questions
How many Microsoft jobs are being cut?
Business Insider reported the round would affect less than 2.5% of Microsoft's roughly 220,000-person workforce, meaning thousands of roles across sales, consulting and Xbox. Microsoft declined to comment and had not formally announced the cuts as of June 30. The reductions would be smaller than the more than 15,000 jobs Microsoft eliminated in two rounds last year.
Why cut jobs while spending record sums on AI?
Microsoft is on pace to spend more than $100 billion this fiscal year on AI and cloud infrastructure, up from $88.7 billion, with about two-thirds going to AI chips, GeekWire reported. The company frames the layoffs as cost control. The CWA union argues Microsoft has the money and is choosing where it goes.
What is happening with Xbox?
New Xbox CEO Asha Sharma and content chief Matt Booty told staff on June 10 the business needs a 'reset,' citing more than $20 billion spent over five years while revenue fell nearly half a billion and the margin slid to about 3%. Gaming revenue fell 7% to $5.3 billion last quarter, with Xbox hardware down 33%.
How is the union responding?
The Communications Workers of America, which says it represents more than 3,500 Microsoft gaming workers, called for immediate bargaining on a June 29 press call. District 9 vice president Frank Arce said 'the money is there' and that leadership is choosing where it goes. A Microsoft spokesperson said it is negotiating in good faith across Xbox.
Could Microsoft close game studios?
Bloomberg reported Microsoft is preparing to close multiple studios if no buyers are found. GamesBeat and GamesIndustry.biz have named Double Fine, Compulsion Games and Ninja Theory among those facing closure or sale, and The Verge reported Ninja Theory is seeking a buyer. The Information reported Microsoft is weighing spinning off Xbox or running it as a subsidiary.
AI-generated summary, reviewed by an editor. More on our AI guidelines.
Marcus Schuler
Editor-in-Chief and founder of Implicator.ai. Former ARD correspondent and senior broadcast journalist with 10+ years covering tech. Writes daily briefings on policy and market developments. Based in San Francisco. E-mail: editor@implicator.ai
