Microsoft has laid off around 9K employees in the latest round of cuts, affecting 4% of the company’s total workforce. According to The Seattle Times, this is all part of the company’s mandate to trim and make room for increased spending in AI infrastructure.
The report says it’s not quite like one game developer from Halo Studios reckoned last week when they said Microsoft was doing its damnedest to replace personnel with AI agents. However, Microsoft is indeed cutting costs as much as possible to accommodate its planned expenditures of over $80 billion in this area, a $25 billion increase over the previous year. These investments are seen as more necessary than ever by Microsoft, with Open AI showing its fangs lately in what has become a complicated partnership.
However, the cuts are weighing heavily on the company’s reputation in other areas, such as gaming. Microsoft spent dozens of billions on gaming acquisitions, such as Bethesda parent company ZeniMax Media and Activision Blizzard, to expand its Game Pass subscription service library. Still, the user base didn’t grow nearly as much as hoped, and analysts are now saying that Xbox might have bet on the wrong horse, since subscriptions do not hold the same appeal for gamers as they do for music or TV/film fans.
Moreover, the industry’s reaction to these latest layoffs was more scathing than ever before. Fourteen months after it shut down Tango Gameworks, which had released a successful and critically acclaimed game (Hi-Fi Rush), Microsoft cancelled a promising online looter shooter from ZeniMax Online Studios, the makers of The Elder Scrolls Online, one of the gaming division’s top performers. Former developers railed against the decision, saying that the project was finally heading in a great direction, and there have been rumors that even Microsoft Gaming CEO Phil Spencer had a blast while playing a vertical slice of Project Blackbird earlier this year.
The only logical conclusion is that the executive did not wish to cancel the game himself, but may have received a mandate from above. Finishing Project Blackbird would have cost quite a bit, as it was just about to ramp up to production with an estimated late 2028 launch window, and Microsoft had other priorities – chiefly, bolstering its AI infrastructure. For gamers and developers alike, though, it’s a shame.
