Xbox SHUTS DOWN MORE STUDIOS! Microsoft lays off 22,000 EMPLOYEES!!

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longside 9,000 more layoffs across Microsoft's various divisions, games like Perfect Dark, Everwild, and an unannounced MMO from the developers of The Elder Scrolls Online have been canceled. Microsoft has also shuttered Perfect Dark developer The Initiative. Xbox is shutting down the studio who released Hi-Fi Rush, The Evil Within, and Ghostwire Tokyo. Microsoft Corporation is reportedly planning another round of job cuts in January 2026.

Estimates suggest that 11,000 to 22,000 roles could be eliminated worldwide.

This would represent about 5% to 10% of its workforce of roughly 220,000.

And people were celebrating acquisitions and pushing for them to get more game studios?? I feel so bad for the people who worked there.
Microsoft eyes major January layoffs (between 11k-22k roles) as AI costs rise — Reports from workers point to Azure cloud teams, the Xbox unit, and global sales as key areas of focus. Microsoft Corporation is reportedly planning another round of job cuts in January 2026. Estimates suggest between 11,000 and 22,000 roles could be removed worldwide. That would equal about 5% to 10% of its total workforce of roughly 220,000 employees. The challenge when AI hype drives your stock price high yet no one uses co-pilot. First you force every division to figure out a co-pilot story and force install it (Xbox Co-Pilot….) then you rename Office to co-pilot so you can say you have hundreds of millions of users. Then when all that fails, you cut the workforce.

The cuts are expected to take place in the third week of January. Reports from workers point to Azure cloud teams, the Xbox gaming unit, and global sales as key areas of focus. So far, Microsoft has not confirmed the plan. This move would follow a difficult 2025. During that year, Microsoft cut more than 15,000 jobs across several rounds. Those actions came even as revenue and profit stayed strong.

AI Focus Drives Cost Shifts

At the same time, Microsoft is spending heavily on AI systems. In the first quarter of fiscal 2026 alone, capital spending reached $34.9 billion. The company expects total spending for the year to pass $80 billion, which would be higher than fiscal 2025.

Most of that money is going toward data centers, chips, and AI tools. Due to this shift, analysts believe Microsoft is moving funds away from payroll and into long-term tech assets. As a result, middle managers and older product teams may face a higher risk.

Meanwhile, roles tied to AI research and core cloud work are seen as more stable. This reflects the company's goal to stay competitive in AI development.