Microsoft has cut around 4,800 jobs, representing approximately 2.1 per cent of its global workforce, in its latest round of redundancies as the technology giant continues to reshape its business amid the rapid rise of artificial intelligence (AI).
The latest cuts are expected to have the greatest impact on the Xbox division and commercial sales teams, according to an internal memo from Executive Vice President and Chief People Officer Amy Coleman.
In the memo, Coleman said the company was responding to sweeping changes across the technology industry, where customer expectations, business models and the nature of work are evolving at an unprecedented pace.
She stressed that the affected positions were “not being replaced by AI”, but acknowledged that artificial intelligence is fundamentally changing how work is carried out.
According to Coleman, many routine tasks can now be automated, making it essential for employees to continually develop new skills and adapt to changing workplace demands.
Despite the reassurance, the distinction is unlikely to ease concerns among workers who see the growing adoption of AI as a key driver behind widespread job losses across the technology sector.
The redundancies come as Microsoft expands its AI ambitions through its Frontier Company business unit, which focuses on enterprise AI deployments supported by the company’s existing AI tools and specialist engineering teams. The initiative is backed by a US$2.5 billion investment, reflecting a broader industry trend in which companies are increasing AI spending while reducing headcount.
Addressing the impact on Xbox, Coleman said the restructuring is intended to strengthen the business over the long term. She added that engineering teams across Microsoft will continue to adjust their priorities and organisational structures to better meet customer needs and drive future innovation.
As part of the reorganisation, four of Microsoft’s gaming studios will move under new management, a decision aimed at safeguarding intellectual property and ensuring ongoing development projects continue uninterrupted.
The gaming industry has been undergoing significant change as advances in generative AI create new commercial opportunities. Companies including Google DeepMind, World Labs, General Intuition, Luma AI and Runway have attracted substantial investment for AI-powered world models capable of generating interactive gaming environments.
The latest announcement follows Microsoft’s voluntary separation programme launched in April, which reportedly targeted about 5,500 employees. Last year, the company eliminated roughly 15,000 positions across two rounds of layoffs.
Microsoft’s job cuts form part of a wider trend across the technology industry. Nearly 154,000 technology workers have reportedly lost their jobs during the first half of 2026, with major firms including Meta, Oracle, Amazon and Cognizant also reducing their workforces.
The company said it remains committed to retaining employees where possible through reskilling programmes and internal redeployment. Coleman revealed that more than 4,000 employees have been reassigned to new positions over the past year, including a further 500 during the current month.
Microsoft had not responded to requests for additional comment at the time of publication.
