Microsoft recently eliminated approximately 9,000 positions, impacting 4% of its global staff. The Seattle Times notes this aligns with broader efforts to reduce operational costs and redirect capital toward artificial intelligence development.

While rumors circulated about AI systems replacing human workers—including chatter from a Halo Studios developer—the company emphasizes cost optimization rather than outright automation. Its projected AI budget now exceeds $80 billion, a $25B jump year-over-year, reflecting intensifying competition with OpenAI amid ongoing collaboration challenges.

Gaming divisions face collateral damage. Despite multibillion-dollar purchases of ZeniMax Media and Activision Blizzard to strengthen Xbox Game Pass, subscriber growth lags. Analysts argue gaming audiences prefer ownership over the subscription models dominating media streaming, raising questions about Microsoft’s strategy.

Recent studio shutdowns sparked outrage. After dissolving Tango Gameworks post-Hi-Fi Rush’s success, Microsoft axed Project Blackbird, an in-development title from ZeniMax Online Studios. Insiders claimed the game showed significant promise, with Gaming CEO Phil Spencer reportedly praising an early demo. Speculation suggests corporate pressure overrode creative decisions, prioritizing AI expenditures over a 2028 release requiring substantial funding.

The shift underscores Microsoft’s strategic pivot, leaving employees and fans disillusioned as infrastructure investments overshadow gaming ambitions.