All the Things She Said, Some of the Things She Didn’t ⭐

It's too early, I know, and there are more details to learn, but I've been mulling over the Xbox layoffs since they were first announced. And I just can't wait on this.

I can't imagine you missed it, but Microsoft told employees Monday that the software giant was laying off 4,800 of them, or about 2.1 percent of the workforce, some immediately and some before the end of the current fiscal year, or by June 30, 2027. This tracks with recent rumors. And the company confirmed that the layoffs were not as bad as they would have been otherwise because its first-ever buyout offer to long-serving U.S.-based employees earlier this year was more successful than anticipated. About 30 percent of the 9,000-ish employees who were eligible accepted it, so it's possible that the total laid off this week would have been closer to 8,000.

By comparison, Microsoft laid off about 15,000 employees at this time a year ago. So this is "good" news in the sense that, while these layoffs were anticipated by months, they were less voluminous than last year's layoffs. And, as important, they were handled much better. You may recall the tone-deaf memo that CEO Satya Nadella wrote a year ago to try and explain why they had just endured several chaotic rounds of layoffs in the first half of 2025.

The "why" of these layoffs is the same this year as last: Despite explicitly telling employees that AI is not to blame, it is, just as it was a year ago. But that's not how it was described. Microsoft chief people office (gross) Amy Coleman informed employees that Microsoft's business is changing because "the way technology is built, deployed, and used is transforming faster than at any point," Microsoft's customers' needs are shifting, and "the business models that serve them are shifting." This part bothers me. "Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it," she writes, as if AI just happened to Microsoft. But it didn't. Microsoft is the company that jump-started this insane AI era, please remember, and their sole innovation thus far, the only thing it's done in 20 years that others have copied, has been overspending on AI infrastructure to the degree that it's endangering the economy.

So there's that. But I want to focus on Xbox.

Xbox is unique inside Microsoft, and it has been uniquely impacted by this round of layoffs and this sudden need to rein in costs at a time when spending costs are exploding exponentially elsewhere at the company. Fully 3,200 of the 4,800 role reductions occurring at Microsoft are happening within Xbox. Put another way, two out of every three employees being laid off at Microsoft worked in Xbox. (It's actually worse than that; see below.)

Xbox began as a traditional hardware console business. Microsoft added the Xbox Live only service a year later, saw its biggest success with the Xbox 360, but only because Sony was a year late to market and horribly expensive at...