Microsoft is gearing up for a major round of job cuts at its Xbox division, according to new leaks.
It would represent the fourth round of layoffs for the Xbox gaming division across the last year and a half, and comes in addition to the 6,000 jobs Microsoft already cut in May 2025.
Whether due to AI hopes or tax changes, the widespread tech industry layoffs that first started back in 2022 continue to make headlines and worsen the job market.
What We Know About the Xbox Layoff Plans
Bloomberg has broken the news, out from “people familiar with the plans who asked not to be identified discussing nonpublic information.”
According to them, Microsoft’s “major layoffs” are coming next week. The publication previously reported that the tech giant is planning thousands of job cuts across the company for next week, and that they’ll “largely” be in sales teams.
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No specific numbers have been released about the exact amount of employee who’ll soon find themselves on the chopping block at Microsoft Xbox.
Why Would Microsoft Cut Jobs?
Microsoft tends to make big organizational shakeups near the close of its fiscal year, which lines up with these reports: The fiscal year ends on June 30th.
However, Bloomberg notes that the Xbox division in particular has seen pressure from the company’s C-suite to increase its profit margins ever since 2023, when it bought Activision Blizzard Inc. in a $69 billion deal.
Across the larger tech industry, executives have publicly suggested plenty of other justifications for their seemingly constant layoffs across the past three or four years. Some have mentioned “economic uncertainty,” while others have praised the job-replacement potential of AI.
Tax Provision’s Role in Industry Layoffs
Not as well known, though, is a tax provision from 2017’s Tax Cuts and Jobs Act, which took effect in 2022. It rolls back corporation’s ability to immediately deduct all the costs of research and development, including engineer salaries.
Companies that weren’t profitable or didn’t have cash on hand suddenly had higher taxes, and were forced to reduce headcount.
There are plenty of other factors to consider as well, of course, from recently imposed tariffs to larger federal deficits triggering higher costs of borrowing. Ultimately, it’s a complex situation, even if it’s one that’s admittedly not exactly helped by corporate greed.
