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Microsoft lays off employees in Xbox, wargame simulation divisions

Tech companies are tightening their belts in response to economic headwinds.

Microsoft confirmed Monday evening that it cut jobs across the company, citing its business priorities. The tech giant would not say how many people had been laid off, nor which departments were impacted. One current employee told The Washington Post layoffs have also affected the Xbox gaming division.

Gaming industry veteran Greg Chapman confirmed layoffs of his Studio Alpha team on Twitter, before taking his account private. The team was what Microsoft called its “serious gaming initiative,” using cloud-computing service Microsoft Azure, artificial intelligence and simulations to solve data problems for the military and commercial use. Chapman declined to comment for this story.

“I didn’t know that I expected [layoffs] in gaming. Azure is a big direction,” said a Microsoft employee speaking on the condition of anonymity as she wasn’t authorized to speak to media. “Ultimately I thought that those areas and gaming were relatively safe.”

KC Lemson, a product and program manager known for inventing a ninja cat meme at Microsoft, also tweeted that she had been laid off. Lemson declined to comment for this story.

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Reports at Business Insider and Axios estimated the layoffs hit nearly 1,000 jobs.

In a statement, Microsoft said, "Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly. We will continue to invest in our business and hire in key growth areas in the year ahead.”

It’s not the first time the company has laid off employees this year, as tech companies tighten their belts in response to economic headwinds. In July, Microsoft laid off less than 1% of its staff of 180,000 across departments like consulting and customer solutions, according to Bloomberg.

The company is also in the process of acquiring video game maker Activision Blizzard for a record nearly $70 billion, pending regulatory approval. The historic deal coupled with the job cuts drew scrutiny from onlookers.

“While it’s reasonable for a company the size of Microsoft to occasionally review and reduce headcount, the timing of these cuts makes their justification feel insincere,” said Brad Sams, general manager at Stardock Software, which makes Windows productivity tools and games.

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Some tech giants have taken aim at their gaming businesses when looking for areas to trim. Google announced in late September it’s shutting down its cloud gaming service Stadia by January 2023, saying “it hasn’t gained the traction with users that we expected.” In August, Meta said it would shut down the Facebook Gaming app, just two years after release.

While the gaming industry developed a reputation for being recession-proof during the 2008 recession, it has felt the pinch this year, after experiencing a significant boom in game sales and hours of gameplay earlier in the pandemic. Gaming titans Nintendo, Microsoft and Sony all reported declining revenue and missed earnings expectations in late July or early August.

“The layoffs at Xbox are surprising, considering Microsoft’s push behind gaming, but it does rhyme with the current economic momentum,” said Joost van Dreunen, a lecturer on the business of games at New York University’s Stern School of Business.

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