July 2025
In yet another wave of job cuts, Microsoft has announced plans to lay off up to 9,000 employees worldwide, as the company doubles down on its investment in artificial intelligence and reshapes its future around the fast-evolving technology.
The layoffs represent roughly 4% of Microsoft’s global workforce of 228,000 employees. While the company hasn’t publicly detailed which divisions are affected, industry sources suggest that the Xbox video gaming unit is bearing a significant share of the blow.
In a statement to the BBC, a Microsoft spokesperson said, “We continue to implement organisational changes necessary to best position the company for success in a dynamic marketplace.”
Among the most notable developments is the reported cancellation of two high-profile gaming projects — a reboot of the cult classic Perfect Dark and the fantasy title Everwild. According to internal communications obtained by tech outlets The Verge and IGN, The Initiative — the in-house studio developing Perfect Dark — will be shuttered as part of the downsizing. Other affected studios reportedly include Turn 10 (makers of Forza Motorsport) and ZeniMax Online Studios, known for Elder Scrolls Online.
Longtime ZeniMax studio director Matt Firor announced his departure, ending an 18-year tenure with the company. In a message shared on social media, Firor wrote, “While I won’t be working on the game anymore, I will be cheering you on and adding to the thousands of hours I’ve already spent in-game.”
The impact isn’t limited to Microsoft. Independent game studio Romero Games Ltd — co-founded by DOOM creator John Romero — also announced layoffs after a publishing deal was abruptly terminated. “These people are the best team I’ve ever worked with,” Romero posted on X, confirming that their unannounced project was among those affected.
This marks the fourth round of layoffs at Microsoft this year. In May, the company slashed 6,000 jobs. Data from Washington state indicates that over 800 of the latest job losses are concentrated in Redmond and Bellevue — key Microsoft hubs in the Pacific Northwest.
A Strategic Pivot Toward AI
The job cuts come as Microsoft ramps up spending on AI infrastructure, committing a staggering $80 billion toward data centers and chip development to support next-gen AI models. This includes its ongoing collaboration with OpenAI, the makers of ChatGPT, in which Microsoft remains a major investor.
Earlier this year, Microsoft recruited Mustafa Suleyman, a British AI pioneer and co-founder of DeepMind, to lead its new AI division — signaling how seriously the company is betting on AI as the foundation of its next chapter.
One Microsoft executive recently told the BBC that the next 50 years will be “fundamentally shaped by artificial intelligence,” changing not just the way we work, but how we relate to technology and to one another.
Yet, Microsoft’s AI strategy isn’t without challenges. Bloomberg recently reported internal tensions between Microsoft and OpenAI, especially as Microsoft’s own AI assistant, Copilot, struggles to gain traction with business clients — many of whom reportedly prefer the more conversational, user-friendly ChatGPT.
Meanwhile, competition for elite AI talent is heating up. Meta CEO Mark Zuckerberg is said to be personally involved in hiring efforts, with reports of offers exceeding $100 million in signing bonuses to lure top researchers — a trend confirmed by OpenAI’s Sam Altman.
Even Amazon’s chief executive Andy Jassy has weighed in, saying last month that AI would likely replace certain roles within the company in the near future.
As Big Tech pushes full steam ahead into the AI arms race, it’s becoming increasingly clear that the industry’s future will not only be written in code — but shaped by who’s left standing after the restructuring dust settles.
