‘I cannot do my job when Microsoft refuses to do theirs’, say Xbox union workers as destructive reset looms from a company that spent over $80 billion on AI last year
Microsoft’s Xbox division is undergoing a major restructuring with layoffs expected to be announced in early July 2026. The “Xbox reset” was announced by newly appointed CEO Asha Sharma and chief content officer Matt Booty, citing challenges including a 3 percent “accountability margin,” significantly higher component prices for consoles due to memory and storage shortages, and an overextended studio system.
Reports indicate at least five studios are being considered for closure, with games like Blade potentially being canceled. While the layoffs are expected to affect less than 2.5% of Microsoft’s approximately 228,000-person workforce, this translates to thousands of affected workers across Xbox, sales, and consulting divisions. Xbox leadership publicly stated they are “not reducing [their] investment in games,” though studio closures and project cancellations suggest a significant restructuring.
The restructuring continues a concerning pattern for Microsoft’s gaming division, including the shutdown of Tango Gameworks despite critical acclaim for Hi-Fi Rush and the cancellation of Project Blackbird despite leadership support. Xbox union workers have expressed frustration with job insecurity, with one worker stating “I cannot do my job when Microsoft refuses to do theirs.” The timing raises questions about priorities, given Microsoft’s substantial spending of over $80 billion on AI infrastructure last year, highlighting potential resource allocation toward emerging technologies over existing gaming operations. This represents another annual fiscal-year restructuring for the company.
Sources
- ‘I cannot do my job when Microsoft refuses to do theirs’, say Xbox union workers as destructive reset looms from a company that spent over $80 billion on AI last year
- Xbox claim they’re “not reducing [their] investment in games” despite looming cuts, as report claims under 2.5% of Microsoft’s total workforce are in the firing line
- Xbox’s ‘reset’: all the news about Microsoft’s looming layoffs and studio closures
- Microsoft expected to lay off thousands in what has become an annual July restructuring