Microsoft Lays Off 9,000 Employees Despite Strong Earnings: Strategic Restructuring Accelerates

Microsoft Lays Off 9,000 Employees, 4% of Workforce: Big Tech Accelerates Restructuring

【Company-Wide Restructuring at Microsoft】

On July 2, 2025, Microsoft announced a large-scale layoff affecting 9,100 employees, or approximately 4% of its global workforce. This marks the second major restructuring in 2025 and impacts employees across departments, regions, positions, and seniority levels. With approximately 228,000 employees worldwide, the number equates to about 4% of the company’s total headcount.

【Severe Impact on Gaming Division: Studio Closures and Project Cancellations】

The layoffs have hit the gaming division particularly hard, including Xbox and Activision Blizzard. For instance, King, known for the “Candy Crush” series, laid off 200 employees, or 10% of its staff. Other affected studios include Raven Software, Sledgehammer Games, Turn 10, Halo Studios, ZeniMax, Rare, and The Initiative. Some have experienced full shutdowns or project cancellations.

The reboot of “Perfect Dark” led by The Initiative has reportedly been canceled, and Rare’s new title “Everwild” has also been suspended. These developments have shocked gamers and highlight the extent to which Microsoft’s strategic shifts are impacting operations on the ground.

【Despite Strong Performance, Microsoft Doubles Down on Strategic Focus】

Interestingly, the layoffs are not due to poor financial performance. In Q2 2025, Microsoft reported $64.7 billion in revenue—up 15% year-over-year—and $245.1 billion in full-year revenue, achieving growth across all business segments.

Phil Spencer, CEO of Microsoft Gaming, stated in an internal message that “we must make tough decisions now to ensure future success,” and explained that “we will scale down or exit some business areas to focus our resources on growth segments.” He also emphasized that the decision “does not reflect the talent or contributions” of the affected employees.

【AI Strategy and Industry Structural Shifts as the Underlying Cause】

The backdrop of this large-scale workforce reduction lies in the rapid evolution of artificial intelligence and its applications in business via generative AI. Microsoft invested early in OpenAI and integrated ChatGPT across its products, but it is now working to reduce reliance on OpenAI and build a more independent AI strategy.

Elsewhere, layoffs have been occurring intermittently in HoloLens and Azure Cloud divisions since 2024. The company appears to be moving away from “metaverse” and hardware-related ventures, instead accelerating its shift toward AI-centric business models.

【Ripple Effects on the Broader Gaming Industry】

This move could impact the gaming industry as a whole. With the console market reaching maturity and cloud-based subscription gaming becoming mainstream, competitors like Sony and Nintendo may be forced to reassess their strategies.

Microsoft has already started offering formerly exclusive titles like “Sea of Thieves” and “Gears of War” on rival platforms, indicating a break from the traditional console-focused business model. These developments may signal a major turning point for the entire industry structure.

【Outlook: Painful Reform or Investment in the Future?】

This layoff marks the fourth major restructuring in the Microsoft Gaming division in the last 18 months. Some employees had anticipated layoffs as early as May, and anxiety within the teams has been high.

Microsoft has stated that it will provide legal compensation, extended healthcare, reemployment support, and priority hiring for internal positions to affected employees. Such measures are part of its corporate social responsibility (CSR) and essential for maintaining brand value.

【Conclusion: Watch Microsoft’s “Focus and Prioritize” Strategy Closely】

As a tech giant with a market cap exceeding $3 trillion, Microsoft continues to pursue profitability and competitiveness through a strategy of “focus and prioritization.” However, the human and operational impact is significant, and how the company navigates this transformation will be closely watched. This wave of layoffs could spark broader industry reflection on the role of tech companies in the AI era.

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