The axe is falling across a range of departments including Xbox gaming, sales, cloud, Azure, and gaming studios like King, ZeniMax, and Turn 10. It marks the largest cull at the company in more than two years, suggesting the suits at Redmond are getting increasingly jittery about balancing bloated AI investment with real-world costs.

Microsoft chief executive Satya Nadella and Xbox supremo Phil Spencer justified the sackings as part of a grand vision to streamline operations, flatten management layers and keep pushing into its so-called strategic growth areas. They mean AI and cloud, naturally.

Vole has already vowed to blow $80 billion on AI infrastructure during fiscal 2025, so there’s clearly little room in the budget for actual humans. According to internal sources, the company is now so obsessed with machine-generated code that "maybe 20, 30 per cent" of some projects are already being cranked out by AI tools.

"Organisational and workforce adjustments are a necessary and regular part of managing our business," Microsoft said.

Microsoft,  Google, Amazon, and Meta as they all hop on the AI gravy train have been pushing staff under it.

This latest purge is reportedly not limited to the gaming division. Reuters confirmed the cuts are spilling across sales and other units too, as Microsoft continues its corporate feng shui. Those remaining can expect to watch an AI take over the work they used to do, all in the name of efficiency and progress.