Microsoft Axes 4,800 Jobs: Xbox Hit Hard, but AI Isn't to Blame

Microsoft has announced the elimination of 4,800 jobs globally, with the video game division taking the biggest hit. The company’s Xbox team will lose 1,600 staff immediately, with an additional 3,200 cuts planned over the next financial year.

Despite the layoffs, Microsoft insists AI is not replacing these roles. In a memo to employees, Chief People Officer Amy Coleman stated, "The roles eliminated today are not being replaced by AI." However, she acknowledged that AI is changing how work gets done, and employees will need to upskill to stay relevant.

This latest round brings the total number of jobs cut by Microsoft in the past 12 months to nearly 14,000. The company previously laid off 9,000 workers last year.

Xbox CEO Asha Shar described this as the "most significant restructure in Xbox history," citing a decline in core business and a severe hardware crisis in the gaming industry. The company's Game Pass subscription service has not grown as expected, and the post-pandemic slowdown in video game spending has added pressure.

Microsoft has been investing heavily in AI infrastructure and faces pressure to establish itself as a major player in artificial intelligence. The company is also training its current employees on how to use AI tools.

The impact on Australia is unclear, but Microsoft employs around 3,000 people in the country.

The latest round of cuts mean the company has cut 13,800 jobs in the last 12 months. (AP)

Amy Coleman insisted AI would not be replacing the jobs. (Peter Rae)

The staff in Microsoft's Xbox team will be slashed over the next year. (Jae C. Hong)