Microsoft is cutting 3,200 jobs in divisions outside of Xbox today, mostly targeting the organization’s Commercial Business segment. The layoffs come in addition to a large but expected firing spree that also hit Microsoft’s Xbox arm on Monday, July 6.

Microsoft EVP and Chief People Officer Amy Coleman announced the Commercial Business layoffs in a blog post reading, “During my time at Microsoft, I’ve seen this company reinvent itself again and again. What makes that possible has always been our people — their resilience, creativity, and willingness to keep learning.”

Microsoft is firing 4,800 people across Xbox and other divisions today, equating to 2.1 percent of its global workforce. While Coleman made it clear that AI will not immediately replace the eliminated employees’ jobs, she hinted that this could and probably would happen in the near future.

“I also want to be direct that the roles eliminated today are not being replaced by AI,” Coleman wrote, apropos of nothing. “At the same time, what is true is that AI is changing how work gets done. Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves.”

We knew the Xbox layoffs and studio sales were coming, but the additional loss of 3,200 non-gaming employees landed as a surprise on Monday. 

In the case of Xbox, Microsoft laid off 1,600 employees today and is preparing for a further 1,600 firings in the coming months. Additionally, it’s spinning off four studios — Compulsion Games, Double Fine, Ninja Theory and Undead Labs — and potentially shuttering a fifth, Arkane.

Xbox employees have been bracing for layoffs since an ominous memo sent out by new CEO Asha Sharma and COO Matt Booty on June 10. They wrote that after a decade of massive studio acquisitions and poor current-gen hardware sales, the Xbox division was over-extended and losing money. Sharma reiterated these sentiments with more force in a blog post formally announcing the Xbox layoffs on July 6.

One week before the job cuts, Xbox union members under Communications Workers of America urged Microsoft to engage in good-faith negotiations around job security and layoff processes. Microsoft fired 9,000 people across its divisions in July 2025, including hundreds of Xbox employees, and it laid off 1,900 Xbox employees in early 2024.