Cliff Notes – Xbox is being set up to fail by Microsoft bosses, claims insider
- Microsoft has reportedly laid off around 4,000 Xbox employees, with further cuts anticipated due to unrealistic financial targets imposed by CFO Amy Hood.
- Insiders suggest that these layoffs are driven by pressures from executives outside of Xbox, particularly following the costly acquisition of Activision Blizzard.
- Despite Microsoft’s strong financial performance, the focus on cost-cutting and AI investment may jeopardise Xbox’s future, as the division struggles to meet challenging revenue goals.
Xbox is being set up to fail by Microsoft bosses, claims insider
Microsoft execs seem to have it in for Xbox (Microsoft)
As the fallout from Xbox’s brutal job cuts continues, more layoffs seem inevitable as Microsoft execs set targets that are going to be almost impossible to meet.
There’s still very little official information about the Xbox job cuts from last week, but estimates suggest that around 4,000 people were laid off. The worst thing is that rumours immediately suggested that more cuts are to come, despite over 6,000 jobs already having been cut in less than two years.
Microsoft has given no real explanation for the enormous cuts, but an insider suggests that they’re been driven by execs outside of Xbox, in part because of the enormous $75.4 billion cost of buying Activision Blizzard.
According to Windows Central’s Jez Corden, Microsoft’s chief financial officer Amy Hood has imposed ‘utterly unrealistic financial requirements’ that will ‘continue hurting the division’ and lead to more layoffs in the future.
Tom Warren of The Verge replied to Corden’s tweet, saying: ‘I don’t think it’s unrealistic, it’s just the reality of the Xbox business after the Activision Blizzard acquisition. Without that deal Xbox revenue would be down, and the Game Pass gamble hasn’t paid off yet.’
To that Corden, merely replied, ‘Disagree.’ The two are the most high-profile Microsoft insiders and they don’t seem to disagree over the idea that Xbox is chasing some extremely difficult targets, with no obvious sign that the current line-up of games can significantly change their fortunes.
Microsoft CFO Amy Hood has given Xbox an utterly unrealistic financial requirement that is going to continue hurting the division. This isn’t over.
— Jez (@JezCorden) July 5, 2025
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At the same time, a report by The Seattle Times points out that Microsoft has laid off over 15,000 people in total during 2025 (and remember, we’re only halfway through the year so far) and supposedly it’s primarily to free up money to invest more in AI.
Microsoft has previously stated that the layoffs have, in part, been an attempt to remove middle managers, but the report suggests that only about 17% of the cuts at Microsoft’s Redmond HQ were managers.
Instead, software engineers were hardest hit, along with product and program managers. Software engineers in particular are the most vulnerable to being replaced with AI but perhaps Microsoft feels managers would be viewed as less sympathetically by the wider public.
However, the report suggests that the company’s focus is not replacing workers with AI but simply saving money by laying them off, in order to invest more into AI infrastructure.
Microsoft plans to spend more than $80 billion – slightly more than the cost of buying Activision Blizzard in 2023 – to ‘meet AI demands’ and the layoffs are apparently the flipside of that decision.
All of this turmoil takes place as Microsoft enjoys some of its best financial results of recent years, making $26 billion in profit on the back of $70 billion sales, beating both Apple and Nvidia, and exceeding analyst estimates.
The AI takeover isn’t quite how people imagined it (Nightdive Studios)
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