Microsoft has announced plans to lay off up to 9,000 employees, marking its latest round of job cuts this year. The reductions—roughly 4% of its 228,000-strong workforce—will impact multiple divisions, with reports suggesting significant cuts in its Xbox gaming unit.
The tech giant, which is investing heavily in artificial intelligence (AI), including an $80 billion push into data centers for AI training, stated that the layoffs are part of necessary “organizational changes” to stay competitive. A Microsoft spokesperson told the BBC: “We continue to implement changes to best position the company for success in a dynamic marketplace.”
Internal memos obtained by The Verge and IGN reveal that Microsoft has canceled the reboot of Perfect Dark and Everwild, two high-profile Xbox titles. The Initiative, the studio behind Perfect Dark, will also be shut down.
Additional cuts have impacted other Microsoft-owned studios, including:
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Turn 10 (developer of Forza Motorsport)
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ZeniMax Online Studios (The Elder Scrolls Online)
Matt Firor, ZeniMax’s studio director for 18 years, announced his departure in July, writing on X: “While I won’t be working on the game anymore, I’ll be cheering you on.”
The layoffs extend beyond Microsoft, with Romero Games—an Irish studio co-founded by Doom creator John Romero—also cutting staff after losing publisher funding. Romero called it a “difficult day” and praised his team as “the best people I’ve ever worked with.”
Washington state records show over 800 layoffs in Microsoft’s home hubs of Redmond and Bellevue. This follows three prior rounds of job cuts in 2025, including 6,000 layoffs in May.
As Microsoft pivots toward AI, the restructuring reflects broader industry shifts—prioritizing new technologies while scaling back in other areas. The company has not confirmed if further reductions are planned.
