Xbox cuts jobs and the Fed hires its CEO to study jobs

Some coincidences make me laugh through my teeth, and this one fits in three days. On Monday, July 6, Asha Sharma, the head of Xbox, signed the internal memo her teams had been dreading for months. "Our business today is not healthy," she wrote, before announcing 1,600 immediate job cuts, the first round of 3,200 over the year¹. Three days later, the US Federal Reserve named her to lead a task force² on productivity and jobs³. The calendar has a sense of humor I don't envy.

The biggest restructure in Xbox history

Overall, Microsoft is cutting 4,800 jobs, half of them at Xbox, spread over a year¹. Sharma herself calls it "the most significant restructure in Xbox history." And her memo doesn't mince words. In a normal year, we learn, the division lost "64 cents for every dollar we invested"⁴. In other words, the more you put in, the more you lost.

Four studios are leaving the ship along the way. Double Fine and Compulsion Games get their independence back, IP tucked under their arms. Undead Labs and Ninja Theory move to new owners, with enough money to finish their current games. That's roughly 350 people switching employers overnight⁴.

Feeling a little déjà vu? You should. Since buying Activision Blizzard in late 2023, Microsoft has run wave after wave of layoffs, shut down Tango Gameworks and Arkane Austin, then cut around 9,000 jobs in the summer of 2025 while canceling Everwild and Perfect Dark⁵. At this rate, restructuring at Xbox is less an event than a season.

The kicker is that Sharma has only been in the job since February. She came from Microsoft's AI division, by way of Meta and Instacart, and had never worked in video games. She took over from Phil Spencer, a fixture there for thirty-eight years, promising to "recommit to our core Xbox fans and players" and not to "chase short-term efficiency"⁶. Five months later, short-term efficiency seems to have caught up with everybody.

A hemorrhage that doesn't spare France

Xbox is sadly just the latest episode in a crisis that has been grinding the industry down for four years. Between 2022 and mid-2025, video games lost about 45,000 jobs worldwide⁵. And 2026 was already well into its quota before Microsoft, with a thousand jobs cut at Epic Games and some 400 at Bungie. The annual survey from GDC, the big game developers' conference, puts a human face on it. One in three American developers says they've been laid off in the last two years⁷. In any other creative industry, this would be called a national crisis.

France isn't watching from the sidelines either. Ubisoft, the country's flagship, closed its latest fiscal year with a record loss of a billion and a half euros. A restructuring launched in January cost about 200 jobs at its Paris headquarters and set off several strikes. In June came another 380 layoffs and the closure of its Winnipeg and Belgrade studios, after Halifax and Stockholm⁸.

Behind every line of those balance sheets are people who make the games we love, the ones we play to death for years and the ones we pass down to our kids. Forgive me if "streamlining" doesn't quite cover it.

Meanwhile, in Washington

Now for the irony promised in the title. On Thursday, July 9, Kevin Warsh, the new chair of the Federal Reserve, announced five working groups to rethink its policy. One of them, called "Productivity and Jobs," is supposed to assess what new technologies, AI first among them, are doing to the economy, and report back by the end of the year. It has three co-leads, venture capitalist Marc Andreessen, Stanford economist Charles I. Jones, and one Asha Sharma³.

So in the same week, the same person cut 1,600 jobs and joined the group in charge of thinking about the future of jobs. Aftermath pointed this out with its usual gentle touch⁹. To be fair, there's a logic to it. Who better than an AI executive in the middle of automating and slashing an entire division to explain to the central bank what technology does to jobs? Her data is very fresh. I just wish the expertise hadn't been paid for by 3,200 households.

Let's hope this avalanche of bad news stops, or at least slows down. Analysts like to think the cycle is ending, and early 2026 numbers did hint at a slight improvement before Microsoft's announcement¹⁰. I want to believe them, out of optimism and out of a gamer's pure self-interest. Meanwhile, a thought for Monday's 1,600, and for the 1,600 who already know their turn is coming. They won't need a task force to measure the impact of new technologies on jobs.

Notes

1. Fortune, "'Our business today is not healthy', 1,600 Xbox employees among the 4,800 laid off by Microsoft", July 6, 2026. The 4,800 jobs represent about 2.1% of Microsoft's workforce. ↩ ↩²

2. A temporary working group put together around one specific mission. A phrase that started in the military and ended up at the central bank, which tells you how seriously everyone takes jobs right now. ↩

3. Federal Reserve, official press release on the task force lineup, July 9, 2026, with details from CNBC. ↩ ↩²

4. Aftermath, "Xbox Will Lay Off 3,200 Workers And Cut Four Studios Loose", July 6, 2026. ↩ ↩²

5. Wikipedia keeps a grim running tally on its "2022–2026 video game industry layoffs" page. It lists the 1,900 layoffs of January 2024, the 650 of September 2024, the peak of some 15,650 jobs lost in 2024, and the more than 3,700 cuts logged in 2026 before Microsoft's announcement, including 680 at Ubisoft. ↩ ↩²

6. Microsoft, "Asha Sharma named EVP and CEO, Microsoft Gaming", February 20, 2026, and CNBC on Phil Spencer's retirement. ↩

7. Variety, "One-Third of U.S. Video Game Industry Workers Were Laid Off Over the Last Two Years", January 2026, based on GDC's State of the Game Industry 2026 survey of more than 2,300 professionals. ↩

8. RTBF, "Restructuration massive d'Ubisoft" (in French), and Gameblog, "Ubisoft licencie 380 personnes et ferme deux studios" (in French), June 2026. ↩

9. Aftermath, "Xbox Boss Asha Sharma Appointed To Federal Reserve 'Productivity And Jobs' Task Force The Same Week She Laid Off 1,600 People", July 9, 2026. The headline does all the work on its own. ↩

10. Game Developer, "Data points to slowing layoffs, but doesn't capture true harm to game industry", 2026. ↩