Microsoft is cutting 4,800 jobs globally, roughly 2.1% of the total headcount.
Xbox division is taking a massive 3,200-job hit, with 1,600 already gone.
Four game development studios are being spun off as “non-core.”
CEO Asha Sharma explicitly blamed margins being 3 to 10 times lower than other Microsoft business units.
Company is hiking console prices to offset component costs and boost hardware margins.
Gaming never delivered profits Microsoft expected after big buys.
AI data centers need cash more than low-margin games.
Studios spun off, key projects continue.
Industry sees more consolidation and cost focus ahead.
Microsoft layoffs announcement and Xbox restructure:
https://www.cnbc.com/2026/07/06/microsoft-cuts-2point1percent-of-employees-as-xbox-unit-plans-to-spin-studios.html Xbox CEO Asha Sharma email to staff:
https://news.xbox.com/en-us/2026/07/06/resetting-xbox/ Reuters on 4,800 cuts and studio spinoffs:
https://www.reuters.com/business/world-at-work/microsoft-joins-ai-driven-tech-layoff-wave-with-4800-job-cuts-2026-07-06/