Microsoft to lay off 9,000 employees amid AI investments
Microsoft has announced a reduction of approximately 9,000 jobs, representing less than 4% of its total workforce. This marks the largest mass layoff for the company in the past two years. The move is aimed at increasing efficiency and focusing on strategic priorities, particularly the development of artificial intelligence.
The layoffs commenced on Wednesday, July 2nd, affecting employees within the Xbox video game division and other branches globally, including the sales department. Specifically, 830 of the dismissed employees are associated with Microsoft's headquarters in Redmond, Washington. Xbox CEO Phil Spencer explained that the goal of the reductions is to ensure "long-term success" for the gaming business and to eliminate management layers to enhance operational agility.
As of June 2024, Microsoft employed 228,000 full-time staff. The announced reductions will impact less than 4% of this number. This is not the first significant layoff; in May 2025, the company had already reduced its workforce by approximately 6,000 employees, with other cuts occurring in Redmond and the Puget Sound region.
These layoffs come as Microsoft continues to make substantial investments in artificial intelligence infrastructure, including data centers and specialized computer chips. These expenditures are projected to amount to approximately $80 billion in the current fiscal year.
Analyst Opinions and Impact on Xbox
According to analyst Dan Ives, the recent layoffs primarily affected slower-growing business areas. This aligns with Microsoft's increasing focus on artificial intelligence, cloud technologies, and the development of the "next generation of Microsoft".
Notably, the reductions within the Xbox gaming division follow major acquisitions such as Activision Blizzard ($75.4 billion) and ZeniMax Media ($7.5 billion).
Questions are emerging regarding the impact of AI on jobs, especially after the reduction of software engineers, as Microsoft's own code-writing software may decrease the need for some of these specialists. CEO Satya Nadella previously stated that "20-30% of the code" for certain company projects is already written by AI.
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