Microsoft plans to cut around 9,000 more jobs, affecting roughly 4% of its global workforce of about 222,000 employees. This would mark the company’s second major round of layoffs in 2025, following a reduction of about 6,000 positions in May. The latest cuts (reported shortly after the close of Microsoft’s fiscal year on June 30) are believed to be part of a wider restructuring effort aimed at reducing costs and shifting more resources toward artificial intelligence (AI) and cloud services, reports The Seattle Times.
This round of job reductions is more widespread and diverse compared to the layoffs in May 2025, which primarily affected product and engineering roles. This time, the reductions go deeper into the company’s structure, hitting departments like sales, marketing, the Azure cloud platform, HoloLens, and especially the gaming division. According to the report, several teams under Xbox have been impacted, including Zenimax and the mobile game company King (known for Candy Crush).
King (which was acquired by Activision Blizzard in February 2016) has reportedly lost around 200 employees, which is close to 10% of its workforce. Meanwhile, staff at Zenimax’s European offices have also been affected (though exact numbers have not been made public). Despite the wide impact of the layoffs, the Satya Nadella-led company has said it remains committed to supporting affected employees with severance packages, continued healthcare, and job placement assistance.
In the last few years, Microsoft’s gaming division has experienced several major rounds of job cuts, especially following its multi-billion-dollar acquisition of Activision Blizzard in 2023. Notably, in January 2024, Microsoft cut 1,900 jobs across its Xbox, Bethesda, and Activision Blizzard divisions. More recently, in June 2025, the tech giant reportedly eliminated over 300 additional positions.
While the company’s gaming revenue has seen decent growth, hardware sales are struggling. As of mid-2024, Xbox Series X and S revenue had declined by 42% compared to 2023. By early 2025, it had sold around 8.3 million units in Europe, which is less than the 10.4 million Xbox One units sold at the same time after its launch.
The latest development comes at a time when Microsoft’s capital spending increased sharply (by 53%), reaching $21.4 billion in the third quarter of fiscal year 2025, which ended on March 31. The company has also set a major goal of investing around $80 billion in AI-related infrastructure for the full year (a significant jump from previous years). However, despite this major push into AI, the tech giant is facing serious challenges, especially with its key partner OpenAI. Microsoft has already invested around $13 billion in the ChatGPT maker. But now, OpenAI is said to be considering antitrust action due to disputes over revenue sharing amid its shift to a for-profit model.
In the meantime, globally, several companies are reducing their workforces as they move toward AI-driven operations. According to layoff tracking platforms, over 61,500 tech professionals have lost their jobs in 2025 across 130+ companies so far. Even Amazon CEO, Andy Jassy, recently said that AI would gradually replace some corporate roles to improve efficiency. However, the statement drew backlash from staff concerned about potential job losses.