Microsoft lays off another 4,800 people! Xbox launches a big reset, selling off 4 studios; HR chief clarifies: Don't blame AI.

The tech giant's transformation pains continue. According to a report today (6th) by Tom Warren, a senior reporter at The Verge, Microsoft has launched a new round of layoffs affecting approximately 4,800 people, with the Xbox division at the core of a business "Reset." On a single day, 1,600 people were laid off, and plans are underway to sell multiple studios. In response to public concerns about "AI taking jobs," Microsoft executives clearly stated that the eliminated positions are not being replaced by AI, but rather are difficult decisions made to address industry changes and departmental profitability struggles.

(Previous context: Microsoft spends $2.5 billion to establish "Frontier Company," sending 6,000 engineers to client offices to truly implement AI)

(Background supplement: Is the AI bet too costly? Microsoft reportedly undergoes "third major layoff in a year," cutting 5,500 jobs, with Xbox hit hardest)

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• Xbox Faces Comprehensive "Big Reset," Commercial Sales Also Affected
• Microsoft's July 2026 Layoff and Relocation Plan Highlights
• HR Head's Internal Memo: AI Isn't Taking Your Job

As the new fiscal year (July) begins, tech giants' workforce restructuring seems to have become the new normal. Following a reduction of about 9,100 employees in July 2025, Microsoft once again wielded the layoff ax on July 6, 2026, announcing it would cut approximately 4,800 employees, roughly 2.1% of its global workforce.

This is undoubtedly a difficult time for affected employees, but it also truly reflects the calmness and decisiveness of tech companies when it comes to resource restructuring and responding to market changes.

Xbox Faces Comprehensive "Big Reset," Commercial Sales Also Affected

The epicenter of this wave of layoffs primarily falls on the Xbox gaming division and the Commercial Sales organization, both of which have faced severe profitability challenges in recent years. Despite significant investment in game development and acquisitions, Xbox has seen declining hardware sales and subscription service revenue. To stem the bleeding and implement a comprehensive business "big reset," the Xbox division laid off approximately 1,600 people in a single day.

Beyond headcount reductions, Microsoft is also actively divesting underperforming assets. Reports indicate that Microsoft is currently in the process of selling four Xbox game studios and is evaluating the possibility of selling a fifth. By the end of this fiscal year, positions across the entire Xbox division are expected to be reduced by about 20%.

Microsoft's July 2026 Layoff and Relocation Plan Highlights

| Adjustment Item | | --- | | Specific Data and Details | | Strategic Meaning and Impact | | --- | --- | --- | | Overall Layoff Scale | Approximately 4,800 people (2.1% of total employees) | Consecutive layoffs at the start of the new fiscal year for two years (9,100 last year) to streamline operating costs. | | Xbox Division Restructuring | 1,600 laid off today; 4 studios to be sold. Expected to downsize 20% for the year. | Addressing the contradiction between high-cost investment and declining revenue; executing a division "big reset." | | Voluntary Severance Plan (VSRP) | Age + years of service ≥ 70 eligible to apply | Over 30% of eligible employees participated. Offers 5 years of medical insurance, severance pay, and 6 months of stock vesting. | | Internal Transfer Arrangements | Over 4,000 employees placed internally in the past year; 500 more transferred this month. | Retaining top internal talent as much as possible to mitigate the social and cultural impact of forced layoffs. |

HR Head's Internal Memo: AI Isn't Taking Your Job

With rapid advancements in artificial intelligence, it's inevitable that the public links corporate layoffs to "AI replacing humans." In response, Microsoft's Chief Human Resources Officer, Amy Coleman, showed frankness in an internal memo to employees. She acknowledged that these layoffs are indeed in response to changes in the tech industry, and that AI has materially transformed how the company operates and works.

However, she also sought to clarify a key misunderstanding in the memo:

"The positions eliminated today will not be replaced by AI. This is about how we reallocate resources to adapt to a changing business environment."

To minimize the impact of the layoffs, Microsoft has also implemented soft-landing measures. This includes internally relocating over 4,000 employees in the past year (with 500 more completing transfers this month). Additionally, Microsoft previously introduced a Voluntary Severance Plan (VSRP) for U.S. employees, where eligibility requires "age + years of service ≥ 70." Benefits include generous five-year medical insurance and six months of stock vesting, which successfully attracted over 30% of eligible senior employees to participate. This shows that while pursuing corporate efficiency, Microsoft is still trying to balance employee care.