Microsoft laid off 4,800 people
The American software company said that the process of restructuring the game segment will include layoffs of 3,200 people, of which 1,600 employees will be fired on July 6.
Despite spending tens of billions of dollars to expand Xbox, notably with the acquisition of Activision Blizzard, Microsoft still has difficulty narrowing the gap with Sony and Nintendo's PlayStation. Therefore, the company must review and readjust its game business strategy.
Recently, Microsoft has also shifted to releasing games on many different platforms, instead of just relying on exclusive games, to promote sales of Xbox gaming consoles.
According to a notice sent to employees by Ms. Asha Sharma, who was just appointed as Xbox leader, they will divest capital from 4 studios. Compulsion Games, the developer of South of Midnight, and Double Fine Productions, the unit behind Psychonauts, will become independent studios. Meanwhile, Ninja Theory and Undead Labs will be separated into separate companies to develop the Senua and State of Decay 3 brands.
Ms. Sharma also said that the leadership of Arkane Studios, the developer of Dishonored and making a game based on the Marvel Comics character Blade, also began consulting with the employee union in France to consider options during the restructuring process.
According to Reuters, the huge wave of investment in AI by large technology corporations, expected to exceed 700 billion USD this year, is putting pressure on them to prove the effectiveness of this technology, while offsetting the increasing costs of deploying AI on an enterprise-wide scale.
However, Microsoft Chief People Officer Amy Coleman emphasized "the positions being laid off today are not being replaced by AI", but added that "it is true that AI is changing the way work is done".
Microsoft stock price decreased 1.4% in the trading session on July 6, after losing nearly 23% of its value in the past 6 months - the sharpest first half decline since 2022.
Earlier this year, the software corporation also implemented a voluntary layoff package for 7% of the US workforce, equivalent to 9,000 employees.
"Microsoft proactively streamlines its workforce to have resources to invest in AI. Maintaining a low staff size helps accelerate revenue growth while maintaining profit margins," Gil Luria, CEO at financial services company D.A. Davidson, comment.
Exploding demand for AI is driving growth in Microsoft's Azure cloud computing segment. This was the only platform distributing OpenAI models until April. However, the increasing costs of building data centers for AI services are putting pressure on the company's cash flow.
Previously, on May 20, Meta also cut 8,000 positions and explained the layoff issue related to financial investments. The company is increasing capital spending in 2026 to $125-145 billion, due to "higher component prices this year and additional data center costs for AI computing power in the coming years."
In January, Amazon announced the layoff of 16,000 office workers, completing a plan to cut 30,000 jobs announced 3 months earlier. According to Beth Galetti, Amazon's senior director of human resources, staffing adjustments "are essential to strengthening the business, reducing layers of management, increasing individual responsibility and eliminating bureaucracy."