Microsoft will cut up to 3% of its workforce and close four game studios

Microsoft plans to lay off 4,800 employees worldwide, representing about 2.1% of the company’s workforce, Reuters reported, citing an internal memo from Microsoft’s chief people officer, Amy Coleman, that was made available to the news agency. According to Bloomberg, the layoffs will affect 6,400 employees, or less than 3% of the workforce, which totals about 228,000 people. The company has implemented cost-cutting measures amid rising expenses for artificial intelligence development, Reuters notes.

The layoffs will primarily affect sales departments. The company has also begun a major restructuring of its Xbox gaming division, according to Bloomberg: Microsoft plans to divest itself of four of its gaming studios and will consider selling or spinning off another one into a separate company. According to the agency, citing an internal memo from Xbox head Ash Sharma, Microsoft’s gaming division plans to cut a total of about 3,200 employees—or roughly 20% of its workforce—over the next year. Of these, 1,600 will be laid off immediately, and the rest by the end of the fiscal year.

“Our business is not in good shape right now,” Sharma wrote Monday morning in a memo to employees, as quoted by Bloomberg. “Xbox’s profitability is three to ten times lower than that of comparable companies. We need to reboot Xbox.” According to Sharma, the goal of the reorganization is to simplify the business structure and redirect the freed-up resources toward larger projects.

Microsoft shares fell 1.3% to $385.3 during Monday's trading session. They have lost more than 20% since the beginning of the year.

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