Microsoft to Lay Off 9,000 Employees Amid Intensified AI Push

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In a significant move underscoring its strategic shift toward artificial intelligence, Microsoft has announced it will lay off up to 9,000 employees, accounting for approximately 4% of its global workforce. This marks the company's fourth round of layoffs in 2025, bringing the total number of job cuts to over 20,000 this year.

A Microsoft spokesperson stated, “We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace.” While the company did not disclose which divisions will be most affected, reports indicate substantial impacts within its gaming business.

Gaming Division Takes a Hit

According to internal communications obtained by The Verge and IGN, several major gaming projects have been shelved as part of the restructuring. These include the highly anticipated reboots of Perfect Dark and Everwild. The Initiative, the Microsoft-owned studio leading the Perfect Dark project, will also be shut down entirely.

Other prominent studios have not been spared. Layoffs have reportedly affected employees at Turn 10 Studios, the developer of Forza Motorsport, and ZeniMax Online Studios, the team behind Elder Scrolls Online. Matt Firor, studio director at ZeniMax, confirmed he will leave his role in July after more than 18 years with the company.

Outside of Microsoft, ripple effects are also being felt. Romero Games Ltd, an independent studio in Ireland co-founded by legendary developer John Romero, announced layoffs after its current game lost publisher support. “These people are the best I’ve ever worked with,” Romero wrote in a statement posted on X (formerly Twitter).

AI at the Core of Microsoft’s Strategy

The job cuts are part of Microsoft’s broader transformation toward becoming a dominant player in artificial intelligence. The company is investing $80 billion in expanding its data center and chip infrastructure to support large-scale AI model training and deployment.

Last year, Microsoft appointed British AI pioneer Mustafa Suleyman to lead its newly established Microsoft AI division. Company executives have described the next 50 years as being "fundamentally defined by artificial intelligence," with technologies like Copilot expected to reshape work and productivity.

However, adoption challenges remain. Reports suggest that Microsoft is struggling to market its AI assistant, Copilot, to business clients, many of whom still prefer using ChatGPT, the flagship product of Microsoft’s close partner OpenAI.

Fierce Competition for AI Talent

Microsoft's restructuring comes amid a fierce war for top-tier AI talent. Rivals such as Meta have launched aggressive recruitment drives to build so-called 'superintelligence' labs. Meta CEO Mark Zuckerberg is reportedly personally involved in hiring, with some offers to AI experts exceeding $100 million in signing bonuses, according to OpenAI CEO Sam Altman.

Amazon CEO Andy Jassy also recently acknowledged that AI advancements are likely to replace some roles at his company.

Layoffs Concentrated in Microsoft Hubs

A database maintained by Washington state reveals that over 800 of the affected roles will be based in Microsoft's home territory, primarily in Redmond and Bellevue, Washington.