• Microsoft cuts 9,000 jobs, affecting 4% of its workforce, including Xbox gaming division.
• Perfect Dark reboot and Everwild canceled; The Initiative studio to shut down.
• Microsoft invests $80 billion in AI, prioritizing data centers and AI development.

Microsoft has confirmed plans to lay off up to 9,000 employees, representing 4% of its 228,000-strong global workforce, in its latest round of job cuts in 2025. The reductions follow three prior layoffs this year, including 6,000 roles cut in May.

The company stated that the layoffs span multiple divisions, with reports indicating significant impacts on its Xbox video gaming unit. "We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace," said by spokesperson.

Staff reductions have hit other studios, including Turn 10 (Forza Motorsport) and ZeniMax Online Studios (Elder Scrolls Online). Matt Firor, ZeniMax Online Studios’ director, announced his departure in July after over 18 years, stating on X: "While I won't be working on the game anymore, I will be cheering you on and adding to the thousands of hours I've already spent in-game."

More than 800 jobs in Redmond and Bellevue, which are the hubs of Microsoft in Washington State, will be terminated. Other than Microsoft, Romero Games Ltd, an independent developer in Galway, Ireland, co-founded by Doom developer John Romero, also laid off employees after funding for its game was reduced.

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Romero posted on X: "These people are the best people I've ever worked with, and I'm sorry to say that our game and our studio were also affected."

The layoff is part of Microsoft as it shifts its strategy to artificial intelligence, which is being supported by an investment of 80 billion dollars in training the AI models in data centers. Microsoft, one of the largest investors of OpenAI, recruited an AI innovator Mustafa Suleyman who will be the head of the division of Microsoft AI.

 A top executive from Microsoft emphasized that AI will "fundamentally be defined" as transformative for work and human interaction over the next half-century. Meanwhile, Microsoft faces challenges selling its AI assistant, Copilot, as many prefer OpenAI’s ChatGPT.