The wave of layoffs sweeping through the tech industry has hit yet another major player. This time, it’s Microsoft, which announced on Thursday that it is cutting 650 roles from its Xbox gaming division.
The job cuts, primarily in corporate and supporting functions, come as the company continues to streamline operations following its $69 billion acquisition of Activision Blizzard, a gaming juggernaut behind franchises like Call of Duty and World of Warcraft.
These latest cuts mark Microsoft’s third significant round of layoffs in its gaming unit since closing the Activision deal. Phil Spencer, CEO of Microsoft Gaming, acknowledged the difficulty of the decision in an internal memo shared with staff.
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“We are deeply grateful for the contributions of our colleagues who are learning they are impacted,” Spencer said, adding that the restructuring aims to “organize our business for long-term success.”
Microsoft said that while some teams will be affected by shifting priorities, no game titles, devices, or experiences are being canceled, and no studios are being closed as a direct result of the layoffs.
“In the U.S., we’re supporting them with exit packages that include severance, extended healthcare, and outplacement services to help with their transition,” Spencer assured, though the severance terms will vary for employees outside the United States.
This round of cuts is part of a broader trend in the tech sector, which has seen a dramatic increase in layoffs over the past two years. While gaming companies like Microsoft, Sony, and Unity have all been forced to reduce their workforces, the challenges extend far beyond gaming.
The broader tech industry is struggling with an economic slowdown, rising interest rates, and post-pandemic shifts in consumer spending patterns. What initially seemed like isolated incidents of downsizing has grown into a much larger movement as companies re-evaluate their long-term strategies in the face of an uncertain future.
Microsoft, despite having made a string of high-profile acquisitions, has not been immune to these pressures. Earlier this year, the company cut 1,900 jobs from its gaming division, only months after completing the Activision deal. In May, the tech giant shuttered several of its gaming studios, including Arkane Austin and Tango Gameworks, although it did not specify how many employees were affected by these closures.
The broader gaming industry has been hit hard. Sony, Microsoft’s key competitor, announced in February that it would lay off 900 workers from its PlayStation unit. The ongoing economic pressures are also visible in other gaming companies like Unity, a software firm, and Twitch, Amazon’s live streaming platform, which have both implemented workforce reductions.
The layoffs are emblematic of a larger downturn in the technology industry. In 2023 alone, tech companies slashed tens of thousands of jobs across multiple sectors—from social media platforms to hardware manufacturers. The mass layoffs at Twitter now rebranded as X under Elon Musk’s leadership, and at Meta, which cut 11,000 jobs, serve as prime examples of the tech industry’s struggle to navigate an increasingly volatile economic environment. The scale of these cuts signals a broader shift away from the rapid growth that tech firms enjoyed during the pandemic.
Verizon Cutting 4,800 Jobs
In a similar move, Verizon Communications Inc. also announced plans to eliminate 4,800 jobs as part of its broader restructuring initiative. The company disclosed a pre-tax charge of as much as $1.9 billion linked to these job cuts, with more than half of the employees affected expected to leave by the end of September, and the rest by March 2025.
The telecommunications giant is also looking to exit certain non-strategic businesses and real estate assets, a move that will incur an additional $230 million to $380 million in pre-tax charges.
The layoffs come at a time when Verizon is pouring billions into building out its fiber-optic network in a bid to secure its future as mobile subscriber growth slows. Last week, the company made its biggest acquisition in over a decade, agreeing to buy Frontier Communications’ fiber-optic assets for $9.6 billion—a deal that also involves taking on Frontier’s debt.
Verizon’s decision to slim down its workforce is part of a growing realization across the industry that the era of rapid expansion, fueled by cheap borrowing and a booming digital economy, may be over. Many tech companies are now facing the harsh reality of declining revenue, rising costs, and fierce competition for consumer attention. The industry’s heavyweights are increasingly being forced to adjust their growth ambitions to match the new economic landscape.
This belt-tightening is likely to continue as tech companies seek new strategies to ensure long-term viability. Verizon, for example, is exploring the sale of thousands of mobile phone towers to raise cash, a move that could bring in over $3 billion, according to Bloomberg.
While Verizon’s recent financial performance has been underwhelming—reporting second-quarter revenue that fell short of analyst expectations due to fewer upgrades of wireless equipment—the company’s stock remains up 15% this year, a small consolation in a challenging environment.
However, the reality for workers in the tech sector is far less rosy. With layoffs continuing across the board, the industry that once promised rapid growth and innovation now finds itself in a period of intense introspection.