Microsoft said it will cut 4,800 jobs and restructure Xbox as it seeks to update its business model to adapt to rapidly changing technologies and the growth of artificial intelligence.
“The way technology is built, deployed, and used is transforming faster than at any point in my time here,” EVP and Chief People Officer Amy Coleman said in a statement announcing the layoffs Monday.
“Companies don’t get to choose whether their industry changes,” Coleman said. “They only get to choose whether they change with it.”
Coleman said that AI isn’t replacing the workers who are being laid off but it is changing the workflow and automating some work.
More tech companies are cutting headcounts to free up billions of dollars to buy expensive AI chips and build massive data centers.
Meta, for instance, recently began 8,000 job cuts as part of a restructuring aimed at reducing costs while investing in AI.
The layoffs, along with the rapid ascent of AI companies such as Anthropic and OpenAI, have led Congress to worry about the possibility of mass unemployment. Microsoft is a major shareholder in OpenAI.
Sen. Bernie Sanders (I-VT), for instance, has called for major new regulations to prevent AI from taking jobs and for the government to take controlling stakes in the largest companies.
Microsoft has taken the biggest hit among tech giants under its current model, shedding nearly a fifth of its value this year, CNBC reported.
Microsoft will implement a series of changes to adapt.
Apart from the layoffs, the 50-year-old company will embed 6,000 engineering experts alongside customers through a $2.5 billion investment in Microsoft Frontier Co. to build custom AI.
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Xbox is letting go of four major studios: Double Fine, Compulsion Games, Ninja Theory, and Undead Labs.
Xbox will shift toward higher-priority projects, such as Minecraft and King, the developer of Candy Crush.