Microsoft lays off 4,800 employees: commercial sales and Xbox divisions affected

Microsoft announced on July 8, 2026 the dismissal of approximately 4,800 employees — about 2.1% of the company's total workforce. The layoffs fell on the first day of the company's new fiscal year and primarily affected the commercial sales and Xbox gaming divisions.

Who was affected by the layoffs

The majority of laid-off employees worked in two business directions. First — commercial sales: teams responsible for corporate contracts, negotiations with enterprise clients, and promoting products — from Azure to Microsoft 365 — in the corporate market. Second — Xbox: the company's gaming ecosystem, including consoles, proprietary development studios, and the Game Pass subscription service.

Key layoff figures:

• ~4,800 employees dismissed on July 8, 2026 — 2.1% of Microsoft's workforce
• In July 2025, the company had already cut 9,100 people
• Total dismissals over two fiscal years: approximately 13,900 employees
• Primary divisions: commercial sales and Xbox
• Announced by — Amy Coleman, EVP and Chief People Officer of Microsoft

July is a traditional start of a new fiscal year for Microsoft. For the second consecutive year, the company is opening this cycle with massive layoffs: in July 2025, 9,100 employees were dismissed, primarily from game studios and consulting divisions, now — another 4,800 people concentrated in sales and Xbox.

How did AI lead to layoffs?

In a memo to employees, Amy Coleman explained the dismissals through changes in the technology industry. According to her, the company needs to "adjust resources and roles and change working principles" to respond to how AI is changing the business of companies like Microsoft.

"We need to adjust resources and roles and change working principles," — from

Amy Coleman's memo, Chief People Officer at Microsoft.

The logic is clear. Microsoft itself is actively implementing AI across its entire product stack. Copilot — an AI assistant in Office, Teams, and Dynamics 365 — is taking over tasks that people used to perform. In commercial sales, this is particularly noticeable: an AI agent qualifies incoming leads, drafts commercial proposals, answers standard customer questions, and maintains deal records. Functions that previously took hours of manual labor are now automated — and along with them, positions are being eliminated.

In the gaming division, the story is different. Following the acquisition of Activision Blizzard in 2023, Xbox faced the task of integrating a massive portfolio — studios, franchises, teams. Meanwhile, the console gaming market is stagnating under pressure from mobile gaming and streaming. Layoffs in Xbox are part of a prolonged restructuring rather than an emergency response.

What it means

Over two fiscal years, Microsoft has laid off approximately 13,900 employees. At the same time, the company is increasing investments in AI infrastructure: building data centers, developing partnerships with OpenAI, releasing its own AI models under the Copilot brand. This is a classic picture of technological transformation — capital investment in computing is growing while spending on traditional functions is being cut.

Google, Meta, and Amazon have experienced similar dynamics: several waves of layoffs against a backdrop of sharp growth in AI budgets. Microsoft's particularity is deep vertical integration of AI: Copilot is embedded in all corporate products, which accelerates the replacement of roles that previously required live employees.

For specialists in corporate sales and the gaming industry, this sends a concrete signal: AI not only opens up jobs in engineering — it simultaneously closes positions in operational and commercial functions, and at the scale of one of the world's largest IT companies.

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