Microsoft has announced a significant reduction in its workforce, laying off approximately 1,900 employees in its gaming division. This move comes just over three months after the tech giant’s $69 million acquisition of video game maker Activision Blizzard.

The internal company memo, obtained by The Associated Press on Thursday, reveals that the job cuts amount to an 8% reduction of Microsoft’s 22,000-person gaming workforce. Impacted employees were from various teams including Activision Blizzard, Xbox, and ZeniMax — all under Microsoft’s umbrella.

Phil Spencer, CEO of Microsoft Gaming, commented in the memo, “As we move forward in 2024, we are committed to aligning on a strategy and execution plan with a sustainable cost structure to support our growing business.”

Blizzard President Mike Ybarra also announced his departure from the company on Thursday on X. In his post, Ybarra expressed support for the impacted employees.

“I want to thank everyone who is impacted today for their meaningful contributions to their teams, to Blizzard, and to players’ lives. It’s an incredibly hard day and my energy and support will be focused on all those amazing individuals impacted – this is in no way a reflection on your amazing work. If there’s anything I can help with, connections, recommendations, etc., DM me.”

“To the Blizzard community: I also want to let you all know today is my last day at Blizzard. Leading Blizzard through an incredible time and being part of the team, shaping it for the future ahead, was an absolute honor. Having already spent 20+ years at Microsoft and with the acquisition of Activision Blizzard behind us, it’s time for me to (once again) become Blizzard’s biggest fan from the outside.”

“To the incredible teams at Blizzard – thank you. Words can’t express how I feel about all of you. You are amazing. Continue to do incredible things and always keep Blizzard blue and the player at the forefront of every decision. To all of those impacted today – I am always available to you and understand how challenging today’s news is. My heart is with each one of you.”

AP reported:

Microsoft closed its $69 billion Activision Blizzard deal in October, nearly 22 months after the deal was first announced after overcoming opposition from antitrust regulators in the United Kingdom and European Union.

The U.S. Federal Trade Commission lost a court fight to block the acquisition but its antitrust enforcers are still pursuing a case that seeks to unwind the deal. The FTC has described the merger as a threat to competition in the video game industry, enabling Microsoft to create “walled gardens” around its Xbox Game Pass subscription service and the emerging business of streaming games on demand.

The latest layoffs at Microsoft follow a chain of job cuts across the tech sector in recent weeks — including those at Google, Riot Games, TikTok, eBay and Amazon. Retail, hospitality, media and other sectors have been it by job cuts as well.

The latest Microsoft layoffs “underscores the importance of having a union voice on the job,” said the Communications Workers of America — which has been working to organize video game employees, including some at gaming divisions at Microsoft.

In an unusual arrangement for the gaming industry, Microsoft has pledged to stay neutral if Activision Blizzard workers in the U.S. and Canada seek to organize into a labor union. The union deal was part of a 2022 agreement with the CWA that helped address U.S. political concerns about the merger’s effects. So far, however, only a small set of Activision Blizzard divisions have formed unions.

In January 2023, Microsoft announced a reduction of 10,000 workers, nearly 5% of its workforce at the time.

Satya Nadella, CEO of Microsoft, announced in a memo to employees that the company will begin laying off “less than 5 percent of our total employee base” by the end of the company’s fiscal third quarter, which ends in March.

“Today, we are making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3,” said Nadella.

“This represents less than 5 percent of our total employee base, with some notifications happening today. It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas. We know this is a challenging time for each person impacted. The senior leadership team and I are committed that as we go through this process, we will do so in the most thoughtful and transparent way possible,” he continued.

“I want to extend my deepest thanks and gratitude to everyone who has contributed to Microsoft up to this point and to all of you who will continue to contribute as we chart our path ahead. Thank you for the focus, dedication, and resilience you demonstrate for Microsoft and our customers and partners each day,” he concluded.

Microsoft to Layoff 10,000 Employees as Part of a Massive Cost-Cutting Initiative

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