Microsoft will cut about 4,800 jobs, around 2 per cent of its workforce, as it overhauls its Xbox division, claiming the games industry is “facing the most severe hardware crisis in its history.”
Microsoft directly employs around 4,00 people in the Republic. It has a number of subsidiaries, including LinkedIn and Activision Blizzard which employ around 2,000 and 250 people respectively. The reduction in staff is likely to have an impact on its Irish operations.
The $2.9 trillion (€2.5 trillion) company told staff in a memo on Monday that the roles being cut were “not being replaced by AI (artificial intelligence)”, but added that “AI is changing how work gets done”.
About 3,200 of the cuts will come from the Xbox team, with 1,600 cuts immediately and a further 1,600 over the next year. The remainder of the lay-offs will be from Microsoft’s commercial division.
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Xbox chief executive Asha Sharma told employees in an email that the “business today is not healthy”, citing “margins that are 3-10x lower than comparable platform and publishing businesses”.
She called for a “reset” of Xbox, as the industry struggles with weak hardware demand, the growth of online gaming and rising component prices.
The console business has slowed following the pandemic-era boom, while game developers have also faced higher development spending and AI demand has pushed up the cost of chips.
[ Microsoft’s Irish business paid $5.6bn in corporation tax last yearOpens in new window ]
The move comes just three years after Microsoft closed the biggest deal in its history, a $75 billion acquisition of games maker Activision Blizzard, which was intended to strengthen Xbox by expanding Microsoft’s portfolio of games and helping attract subscribers to its Game Pass service.
However, Microsoft’s shares have fallen a fifth since the start of the year as investors question whether the company will generate sufficient profits to justify its huge spending on AI.
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Under former chief executive Phil Spencer, Xbox invested heavily in gaming studios in an attempt to encourage customers to buy its Xbox Game Pass subscriptions.
Sharma said that “while those businesses have created meaningful value, they did not grow at the pace we expected”. Sharma said that Xbox would offload four of its gaming studios, while making cuts in its remaining units including Activision, Blizzard and Minecraft maker Mojang.
She added that “in a typical year, we lost 64 cents for every dollar we invested” in gaming studios. - Copyright The Financial Times Limited 2026
