New Massive Layoff Hits Microsoft Employees Hard

Microsoft has initiated another major restructuring of its global workforce. This time, around 9,000 employees will be laid off — about 4% of its staff. The announcement comes as a surprise given the company’s strong market performance and massive investments in artificial intelligence.

According to sources from The Wall Street Journal and The Verge, the layoffs will mostly affect sales, marketing, and the Xbox division. This is the third major round of job cuts in 2025, following a series of adjustments that began in 2023, which also impacted the gaming sector.

The move signals a new phase in Microsoft’s structural transformation. The company is aiming to be more agile, less hierarchical, and more efficient in adopting new technologies. To achieve this, Microsoft is replacing traditional roles with AI-driven processes. At the same time, it’s trying to maintain a narrative of strategic growth — rather than retreat.

“We need to ensure our structure aligns with our long-term priorities,” said Phil Spencer, head of the Xbox division, in an internal memo. He confirmed that support teams, development studios, and even some projects in progress have been discontinued.

The decision took many employees by surprise. While there were already signs of restructuring in recent quarters, the scale of the cuts reflects a more aggressive shift. Judson Althoff, head of the commercial business group, will also step away from the company for two months. Officially, it’s a sabbatical. Unofficially, the timing coincides with the ongoing reorganization of his department.

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The AI Factor

In April, Microsoft announced an $80 billion investment in artificial intelligence and data center infrastructure. The company is expanding its partnership with OpenAI and integrating generative models into every Microsoft 365 product, from Teams to Word. The move promises productivity gains but also requires a reconfiguration of internal teams.

“AI is not just transforming what we do — it changes who needs to do it,” said company president Brad Smith during a recent conference. That transformation, however, comes with a high — and repeated — human cost.

Since January, Microsoft has laid off over 15,000 people worldwide. In May alone, the number reached 6,000. In June, another 300. Now, an additional 9,000 employees join the list. The company cites shifting priorities, overlapping roles, and the removal of management layers as key reasons.

Affected teams were notified in late June. Among them: cloud sales professionals, regional marketing staff, and various middle-management roles. Microsoft stated that all impacted employees will receive severance packages, job placement support, and temporary health benefits.

Xbox: Growth Meets Uncertainty

The gaming division has been one of the hardest hit. Since early 2023, Microsoft has shut down projects like Perfect Dark and scaled back several teams connected to the Forza franchise. While the company still invests in its own titles, analysts suggest the new strategy favors commercially proven games over creative risks.

Internally, sources say the cuts aim to reduce redundancies after the 2023 acquisition of Activision Blizzard. “We’re consolidating roles and reorganizing teams to deliver more value to players,” said Spencer.

The Xbox shakeup reflects a broader industry trend. Other tech giants are following a similar path. Amazon, Meta, Intel, and Google have also announced layoffs in recent months — always paired with messaging around AI focus and operational reengineering. Combined, these companies have cut over 100,000 jobs in 2025 alone.

Public Reaction and Controversy

The layoffs triggered strong reactions across social media and professional forums. In the U.S., criticism grew over Microsoft’s H-1B visa applications for foreign workers in areas hit by job cuts. “How can they lay off Americans and ask to hire overseas?” asked one former employee on LinkedIn.

Microsoft responded that its hiring practices comply with immigration laws and that international recruitment is not tied to the ongoing restructuring. Still, the situation has reignited debate about how tech giants balance profitability, innovation, and social responsibility.

A Moment of Transition

This restructuring places Microsoft at a critical point. On one hand, it leads the market in value, with strong profits and a key role in shaping the global tech agenda. On the other, it faces the challenge of adapting its workforce to a new reality — one that’s leaner, more technical, and increasingly automated.

It remains to be seen how the company will balance that process without undermining its internal culture or public image. Until then, the numbers speak loudly: thousands laid off, entire departments reshaped, and a multibillion-dollar bet on what Microsoft sees as the future — artificial intelligence.