Microsoft Says January 2026 Rumors Are “100 Percent Made Up”
The rumors that Xbox will be letting go of thousands of employees this January are not true, according to Microsoft’s CCO. It’s been a wild couple of years for the tech giant, which has become the world’s largest games publisher but has also struggled to compete in the hardware space and has become infamous for cancellations and layoffs. For now, though, it seems like Xbox will be spared from another massive job cut.
In the summer of 2025, Microsoft laid off thousands of employees across the globe, equal to roughly 4% of its workforce. That round of cuts saw many games get canceled and several studios shut their doors for good in the biggest mass firing at the company since 2023. Over the past few years, sweeping layoffs have become an unfortunate trend at Microsoft, so many did not question recent rumors that another round of corporate cutbacks was in store. However, these predictions may not have been accurate this time around.
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Microsoft CCO Says Xbox Layoff Rumors are ‘100 Percent Made Up’
As news of layoffs caused by rising AI costs began to circulate, Microsoft CCO Frank X. Shaw responded to one such claim on X, saying the rumor was fabricated. The response came after noted insider Jez Corden also denied the theory, at least as it pertains to Xbox. It’s unclear if Shaw is also only speaking about Xbox, as the original rumor said the layoffs would be spread across the gaming segment, Azure Cloud, and sales teams, but his staunch tone seemingly suggests the entire report is false. Sill, it’s easy to see where the rumors might stem from, as Xbox did replace hundreds of laid-off workers with AI in 2025, and the company has pushed hard for the technology lately.
On the other hand, there is also reason to believe Xbox can weather rising AI costs without another round of layoffs. After the infamous 2025 cuts, Microsoft CEO Satya Nadella said the company was “thriving,” with its current and projected financials looking strong. In the tech giant’s most recent financial statement, it said 2025 “was a year of record performance,” with overall profits growing 17% to $128.5 billion. Of course, it’s worth noting that Microsoft’s operating income also grew by a double-digit percentage in 2024, and those billions in profits did not stop the company from laying off employees, so performance is not always a direct indicator of employment trends.
Even if Xbox does not suffer a round of layoffs this January, the company’s enthusiasm around AI is undeniable. Nadella has previously expressed hopes that Microsoft could use AI to generate entire games, and the use of generative AI has already cropped up in big franchises like Call of Duty and Halo. Whether this rising AI use will lead to job cuts is uncertain for now, but it remains controversial among gamers and industry insiders alike. Some advocate for it as a way to save developers time and resources, while others express fears that it could impact jobs or lead to copyright concerns for smaller artists.
While Microsoft may not be terminating jobs this month as some have feared, layoffs have become a worrying trend across the industry as a whole. In October 2025, Amazon cut over 14,000 jobs, many of which came from the company’s gaming segment. Funcom, Crystal Dynamics, and EA all suffered layoffs in 2025, too. It’s an unusual time for video games, with gaming being more popular than it ever has been, while many studios, small and large alike, grapple with financial challenges amid rising development costs and a competitive market. Only time will tell how things pan out from here.