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Microsoft may soon announce another round of layoffs. Multiple reports indicate that the company is again planning to reduce around 2.5% of its global workforce, affecting sales, consulting, and the Xbox gaming division. Interestingly, the current global employee count of the company is around 228,000. Therefore, even a 2.5% reduction will make a significant number of people lose their jobs. It will be one of the major workforce reductions at Microsoft after the 4% layoff in July 2025.
While Microsoft has not officially confirmed which teams will be affected, the gaming division is suspected to become the most impacted one. Xbox has already gone through major changes since Microsoft completed its Activision Blizzard deal. Some studios have closed, projects have been canceled, and several teams have been reorganized. Recent reports even indicate that the company is about to close Arkane Studios, putting a full stop to Marvel’s Blade development.
These reports have arrived at a time when Microsoft is investing heavily in artificial intelligence. The company has committed billions of dollars to AI infrastructure, cloud services, and new software. So, many industry experts believe AI has become Microsoft's biggest priority.
Also Read: Xbox Game Pass Content Under Threat? Layoffs Signal AI-Heavy Future
If Xbox teams are included in the latest layoffs, it could point to a broader change in Microsoft's gaming strategy. Instead of growing through more acquisitions or larger development teams, the company may focus on making existing studios more efficient. Services such as Game Pass are still expected to remain at the center of Xbox's plans.
Microsoft is unlikely to move away from gaming altogether. It still owns some of the industry's biggest franchises. However, the latest reports suggest the company's biggest investments are now going toward AI. For Xbox, that could mean a stronger focus on careful spending instead of rapid growth.
