7 key things to know about Microsoft's second-biggest layoff in history

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Microsoft is undergoing another major round of layoffs, impacting around 9,000 employees — roughly 4% of its global workforce. This move marks the company’s second largest round of job cuts in 2025 and reflects its ongoing efforts to streamline operations and reshape teams amid changing business priorities. The layoffs span across departments, locations, and seniority levels, with a significant number affecting its Xbox gaming division. Studios like King, ZeniMax, and Turn 10 are among those hit, and projects like Perfect Dark and Everwild have been scrapped. Here’s everything you need to know about Microsoft’s latest workforce reduction.Employees from various teams, locations, and seniority levels will be affected by the latest round of job cuts announced by Microsoft. The software giant revealed that it is laying off 4% of its global workforce that translates to around 9,000 employees.Microsoft said that the job cuts are part of “organizational changes necessary to best position the company and teams for success in a dynamic marketplace.”

Employees in Microsoft’s Xbox division known as Microsoft Gaming will be hit hard by these layoffs. While the exact numbers and divisions are not known yet. According to a Bloomberg report, King, the Microsoft-owned company behind Candy Crush, is cutting about 10% of its staff, or around 200 jobs. Other parts of Microsoft, like ZeniMax, are also laying off workers. The company is also cutting over 70 jobs at its Forza Motorsport studio, Turn 10, and has cancelled the games Perfect Dark and Everwild. The game studio working on Perfect Dark, called The Initiative, is also shutting down because of these job cuts.

Notably, this is the second biggest job cut by Microsoft in the year 2025 and its second largest overall. The company slashed 6,000 jobs in May this year, targeting product and engineering roles, followed by at least 300 more job cuts in June. The company then cited the need to “remove layers of management to increase agility and effectiveness” while redirecting resources toward artificial intelligence development.

A Bloomberg report quotes a Microsoft spokesperson who said the job cuts will affect employees from different teams, locations, and experience levels, as Microsoft aims to simplify its structure and reduce management layers. “We continue to implement organizational changes necessary to best position the company and teams for success in a dynamic marketplace,” the spokesperson added.Xbox leader Phil Spencer sent an internal memo to its employees. Informing about the layoff, Spencer said “To position Gaming for enduring success and allow us to focus on strategic growth areas, we will end or decrease work in certain areas of the business and follow Microsoft’s lead in removing layers of management to increase agility and effectiveness.”“Prioritizing our opportunities is essential, but that does not lessen the significance of this moment. Simply put, we would not be where we are today without the time, energy, and creativity of those whose roles are impacted,” he added.“HR is working directly with impacted employees to provide severance plan benefits (aligned with local laws), including pay, healthcare coverage, and job placement resources to support their transition.”Microsoft has held several rounds of layoffs in recent years. In 2023, it slashed 10,000 jobs, following the company’s $69 billion Activision Blizzard acquisition in October 2023. In 2024, the tech giant cut 11,000 jobs last year.The company had laid off multiple employees this year alone. In May, Microsoft slashed 6,000 jobs, plus an additional 305 cuts in June.

According to a CNBC report, Microsoft stock hit a record high of $497.45 on June 26. On Wednesday – July 2, it dipped slightly by 0.2%, while the S&P 500 rose 0.5%.

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