AP Technology Writer Matt O’Brien
Microsoft fired thousands of workers, its second major layoff, and its biggest layoff in over two years.
The tech giant began sending layoff notifications on Wednesday, hitting the company’s Xbox video game business and other divisions.
The company refused to say how many people would be fired, but said it would account for less than 4% of the workforce it went on a year ago.
Microsoft said the cuts will affect multiple teams around the world, including its sales division.
“We continue to implement the organizational changes necessary to maximize our company and team to be successful in a dynamic market,” the statement said.
Xbox CEO Phil Spencer sent a note to employees on Wednesday. It said that Cut will position the video game business “to endure success and focus on strategic growth areas.”
Also, “follows Microsoft’s lead in removing management layers to increase agility and effectiveness,” Spencer wrote.
Microsoft employed 228,000 full-time workers as of June last year. The company said Wednesday that its latest layoffs will cut nearly 4% of its workforce. This would be around 9,000 people. However, there have already been at least three layoffs this year, and it is unlikely that new jobs will match the amount lost.
So far, the biggest layoff of the year was in May, when Microsoft began laying off about 6,000 workers, nearly 3% of the global workforce, the company spent so much money on artificial intelligence, making it the biggest job cut in over two years.
Microsoft cut 300 workers, based at its headquarters in Redmond, Washington, in June, to 300 more workers, along with the nearly 2,000 people lost in the Puget Sound area in May, according to a notification sent to Washington employment officials.
The layoffs, released in May, focused on people in software engineering and product management roles, according to a list sent to employment agencies that had companies sent to Washington and California’s employment agencies clashed with Microsoft offices in the San Francisco Bay Area.
In an April revenue call, Amy Hood said the company is focusing on “building and agile high-performance teams by reducing the number of layers with fewer managers.”
The company has repeatedly characterized recent layoffs as part of a push to the management layer, but focusing on software engineering jobs has encouraged concerns about how the company’s own AI code creation products can reduce the number of people needed for programming jobs.
Microsoft CEO Satya Nadella said earlier this year that “probably 20, 30% of the code” for some of Microsoft’s coding projects “probably all written by software.”
However, the latest layoffs appeared to be centered around regions where the company’s business is growing slowly, said Wedbush Securities analyst Dan Ives.
“They are increasingly focused on AI, the cloud, and the next generation of Microsoft, and are really looking to cut back on Xbox and some of the legacy areas,” says Ives. “I think they’ve been fulfilled over the years. This makes sure Nadella and the team are still efficient, and that’s the name of the Wall Street game.”
Original issue: July 2, 2025 11:10am EDT
