Microsoft Trims Workforce by 4,800 as AI Strategy Shifts

Amy Coleman, executive vice president and chief people officer, addressed the cuts in an internal memo, citing a shifting technological landscape. She emphasized that while AI is fundamentally altering how work is performed, the specific roles eliminated are not being directly replaced by automated systems. Instead, the company aims to adjust its internal structure to better align with its highest strategic priorities.

The Xbox division faces significant contraction, with 1,600 employees impacted today and plans to eventually reduce that workforce by roughly 20 percent by the end of the financial year. Beyond personnel cuts, Microsoft is divesting from four gaming studios and considering the sale of a fifth, signaling a broad reset of its gaming business following a period of persistent struggle.