Microsoft Laid Off 4,800 People and Says AI Isn't to Blame - While Throwing Billions Into the Same AI

Microsoft has laid off around 4,800 people - 2.1 percent of its entire global workforce - in a new wave that feeds fears that artificial intelligence is starting to replace people. The hardest hit is Xbox, which in a single day lost 1,600 employees, on top of cuts in commercial sales and engineering teams.

The official wording is carefully chosen. Amy Coleman, executive vice president for human resources, wrote to employees: "AI is changing how work gets done. Some tasks can now be automated, which means we have to keep learning." In the same note she claims that jobs "are not being replaced by AI." It is hard to read those two sentences side by side without a smile - if AI is not replacing them, why are they leaving right now, when the company is simultaneously throwing billions into the same technology?

The head of Xbox, Asha Sharma, was more direct: "Our business today is not healthy. We are operating with margins 3 to 10 times lower than comparable businesses." She called this "the most significant restructuring in Xbox's history." In other words - Microsoft's gaming does not earn enough, and the employees pay the bill.

This is not an isolated move. After voluntary departures in April (estimated at 5,500 people) and around 15,000 laid off last year in two rounds, another 3,200 cuts are expected by the end of fiscal 2027. In the same period Microsoft launched a new corporate-AI business unit worth 2.5 billion dollars. The money goes where the company believes the future is - and that is not people.

The wider picture is even sharper: in the first half of 2026, the tech industry lost over 154,000 jobs. Every company uses the same sentence - "AI is changing work." But for the worker who gets a memo on Monday morning, the difference between "a machine replaced you" and "a priority that now goes into a machine replaced you" is purely linguistic. The result is the same.