Microsoft announced the layoff of about 4,800 employees worldwide, equivalent to about 2% of its total workforce. Software
This move is part of the company's efforts to reduce costs and restructure operations, especially in the Xbox video game division which is currently facing various challenges.
Of these, about 3,200 positions involve the Xbox division. Microsoft also made a major shakeup by selling several game development studios.
Among the studios that will become independent companies are Compulsion Games and Double Fine Productions, while Ninja Theory and Undead Labs are expected to find new owners to continue developing existing projects.
According to Microsoft, this change was made because the company needs to adapt to changes in the technology industry which is now increasingly focusing on artificial intelligence (AI).
Although the company admits that automation is increasingly changing the way work is done, Microsoft explained that these layoffs are not because AI is directly replacing their jobs.
On the contrary, the company is investing billions of dollars to develop data centers and AI technology to remain competitive in the market.
Meanwhile, Xbox has also been struggling with business performance. Xbox CEO Asha Sharma described the division's business as "unhealthy," with profit margins far lower than its competitors.
Its Game Pass subscription service has also lost customers after a price hike last year, forcing Microsoft to cut its subscription fees again.
In addition to cutting staff, Microsoft has also raised the price of Xbox consoles worldwide due to rising component costs.
Similar moves have been made by other tech companies, including Sony, Nintendo and Apple.
Overall, the shakeup suggests Microsoft is prioritizing long-term growth through AI, even if it means making significant sacrifices in its gaming business.
