Microsoft has announced another significant round of layoffs, confirming plans to cut as many as 9,000 jobs as part of its ongoing organizational changes this year. While the technology giant did not specify which divisions would be affected, reports suggest that its Xbox video gaming unit will be particularly impacted. A company spokesperson indicated that these adjustments are “necessary to best position the company for success in a dynamic marketplace,” reflecting a broader strategic realignment within the tech behemoth. These cuts represent approximately 4% of Microsoft’s vast global workforce, which totals 228,000 employees.
Gaming Division Faces Significant Impact
The gaming sector within Microsoft appears to be heavily affected by these latest redundancies. According to internal communications seen by The Verge and gaming publication IGN, Microsoft has informed its gaming staff about the cancellation of two major titles: the planned reboot of the first-person shooter series Perfect Dark, and another title, Everwild. Furthermore, the memo stated that The Initiative, a Microsoft-owned studio responsible for the Perfect Dark reboot, will be shut down entirely. Job cuts have also reportedly extended to staff across other Microsoft-owned studios, including Forza Motorsport maker Turn 10 and Elder Scrolls Online developer ZeniMax Online Studios, as evidenced by employee posts on social media.
Leadership Changes in Gaming Studios
The impact of the layoffs is also being felt at the leadership level within Microsoft’s gaming studios. Matt Firor, the long-serving studio director of ZeniMax Online Studios, announced on Wednesday that he would be stepping down from his position in July, concluding a tenure of over 18 years at the studio. In a post attributed to Mr. Firor by ZeniMax on X, he expressed continued support for the game, stating, “While I won’t be working on the game anymore, I will be cheering you on and adding to the thousands of hours I’ve already spent in-game.” This leadership change further underscores the significant restructuring underway within Microsoft’s gaming division.
Broader Industry Impact: Independent Studios Affected
The ripple effects of these funding and strategic shifts are also impacting independent studios within the gaming ecosystem. Romero Games Ltd., an independent studio based in Galway, Ireland, co-founded by Doom developer John Romero, has also announced staff cuts. This decision came after funding for its game was abruptly axed by its publisher, highlighting the interconnectedness of the industry and how major corporate decisions can have cascading effects on smaller development teams. Mr. Romero expressed his regret on X, noting, “These people are the best people I’ve ever worked with, and I’m sorry to say that our game and our studio were also affected.”
Microsoft’s Strategic AI Refocus
These latest job cuts are part of a broader trend at Microsoft, which has initiated three other rounds of redundancies so far in 2025, including a cut of 6,000 roles in May. The company’s strategic refocus towards artificial intelligence is a key driver behind these organizational changes. Like many other major technology firms, Microsoft has been heavily investing in developing AI capabilities, including committing a staggering $80 billion (£68.6 billion) to build massive data centers specifically for training AI models and investing in advanced chips. This significant financial commitment underscores AI’s central role in Microsoft’s future.
AI Leadership and Industry Vision
Microsoft’s commitment to AI is further evidenced by its strategic talent acquisitions. Last year, the company notably hired British AI pioneer Mustafa Suleyman to lead its new Microsoft AI division, signaling its intent to be at the forefront of AI innovation. A top Microsoft executive recently articulated the company’s long-term vision to the BBC, stating that the next half-century will “fundamentally be defined by artificial intelligence,” predicting profound changes in how we work and interact. While Microsoft is also a major investor and shareholder in OpenAI, the creator of the popular chatbot ChatGPT, reports suggest that the relationship has experienced some tension recently, particularly as Microsoft’s own AI assistant, Copilot, has reportedly struggled to gain traction with business customers who often prefer ChatGPT.
The Tech Talent War for AI Expertise
The layoffs among rank-and-file workers at Microsoft occur concurrently with an intense talent war among major U.S. tech companies for top AI expertise. Firms like Meta, the parent company of Facebook and Instagram, have been aggressively poaching talent from rivals to establish “superintelligence” labs, with CEO Mark Zuckerberg reportedly personally involved in recruitment efforts. Sam Altman, CEO of OpenAI, recently revealed that members of his team have been receiving offers of over $100 million (£74.3 million) as “signing bonuses” from Meta. This fierce competition for AI talent, coupled with announcements from leaders like Amazon boss Andy Jassy, who expects AI to replace some of his firm’s workers, paints a complex picture of a rapidly evolving tech landscape driven by the transformative power of artificial intelligence.
