Microsoft has cut around 4,800 roles, including 1,600 at Xbox, in a move that highlights the ongoing impact of artificial intelligence on the job market. This latest round of layoffs comes as companies grapple with how to integrate AI into their operations while maintaining human employment.

“Our business is changing because the world around it is changing,” said Amy Coleman, Microsoft’s EVP and chief people officer. “The way technology is built, deployed, and used is transforming faster than at any point in my time here.”

The restructuring will see Xbox undergo significant changes, including a reduction from 14 management layers to five or fewer, with some studios transitioning to new ownership. The company aims to focus on core strategic pillars like Mojang and King.

“We are operating at margins that are 3–10x lower than comparable platform and publishing businesses,” said Asha Sharma, CEO of Xbox. “The industry is facing the most severe hardware crisis in its history.”

The layoffs reflect a broader trend in tech where job cuts correlate with increased AI spending, as companies seek to keep up with rapid technological changes.