Microsoft Lays Off 1,600 Xbox Workers After Securing 2,273 H-1B Visas

Microsoft told staff on Monday, July 6, that it would cut 4,800 jobs in a single day, the largest one-shot layoff the company has announced in a fiscal year it opened that same morning. About 1,600 of those roles sit inside Xbox, the gaming division that built Microsoft’s decade-long run as the seller of the dominant video game console.

The same calendar year, US Citizenship and Immigration Services approved Microsoft to hire 2,273 employer-sponsored, non-immigrant workers under the H-1B visa program, with more applications still pending, according to data reviewed by Fox News Digital. That second number, sitting one line below the first in every news cycle the company has touched this month, is what turned a routine restructuring into a political story.

The Two Numbers Behind the Backlash

The Microsoft layoff announcement and the H-1B approval data describe the same company, in the same year, doing two different things at once. CNBC reported the 4,800 cuts as 2.1% of Microsoft’s global workforce, with the bulk concentrated in Xbox and the commercial sales organization. Fox News Digital, citing USCIS, put the H-1B approvals at 2,273 for the calendar year.

Microsoft ranked as the sixth-largest recipient of H-1B visas overall, in a program whose beneficiaries are overwhelmingly from India, per Fox News Digital. That ranking, in tandem with the layoff count, lit up comment threads on X, TeamBlind and Reddit within hours of the email. Last year Microsoft cut roughly 9,000 jobs in multiple rounds; the H-1B filings continued through that period as well.

Of the 228,000 people Microsoft employed as of June 2025, 125,000 worked in the United States, with the remainder based internationally, per the company’s FY2025 Form 10-K filing cited by Newsweek. The bulk of the workforce has not been touched by this round. The optics of the cut are also hitting harder because gaming, of all the divisions, is the one outsiders actually knew.

What the Xbox Memo Actually Says

Xbox CEO Asha Sharma addressed gaming staff in a separate email the same morning, framing the cuts as a structural reset rather than a routine reduction. Sharma wrote that the division is operating “at margins that are 3-10x lower than comparable platform and publishing businesses,” pointing to years of broad bets on Game Pass, on multi-platform releases, and on studio acquisitions that did not return what leadership expected.

She used the word reset, plainly. “We will return to growth in 2027,” Sharma wrote, per the text of the email published by CNBC.

The math adds up to 3,200 people leaving Xbox across fiscal year 2027, which at Microsoft began the same July 6. Half were cut on Monday; the rest exit in waves across the next twelve months, on top of one more round likely in the new fiscal year. That is roughly 20% of Xbox’s headcount, the deepest gaming shakeout Microsoft has run. Microsoft shares slipped 1% on Monday while the Nasdaq climbed 1%. Microsoft’s stock is down 19% year to date, the worst performer among megacap tech in 2026.

Four Studios Are About to Leave Microsoft

Half the shock inside Xbox is the studio map. Per Sharma’s memo, four gaming studios Microsoft acquired over the last decade will leave the company, two returning to independence and two going to new owners.

France-based Arkane Studios, picked up in the $8.1 billion ZeniMax Media acquisition in 2021, has begun formal works-council consultations on whether to sell or close. Its upcoming Blade project is delayed and over budget, per the memo. Bethesda, Mojang, King, and Activision Blizzard teams also face reductions, with Bethesda Studios taking larger cuts. id Software’s Texas engine team was hit hard in the same round, the latest signal that the cuts run deeper into the studios than the four high-profile spinoffs.

Microsoft’s Defense in a Single Sentence

Asked by Fox News Digital about the H-1B and layoff collision, a Microsoft spokesperson offered three sentences and no elaboration.

These decisions are based on business need, not visa status. H-1B employees were also impacted by job eliminations in the U.S.

The statement matches the company’s prior public posture during last year’s 9,000-job cut, when Microsoft likewise said H-1B workers were among those let go. Microsoft has not disclosed the share of H-1B holders in either layoff round. The framing, that this is restructuring rather than replacement, is now the company’s defense in three forums at once: a public backlash, political pressure from Capitol Hill, and a federal investigation into H-1B fraud that Vice President JD Vance launched this week.

The H-1B Footprint Behind the Optics

The reason the numbers land as hard as they do is the company’s standing in the program. Microsoft has been one of the heaviest users of H-1B visas in US tech through the last several fiscal years, with filings peaking above 11,000 applications in some years, per public disclosure data tracking reported by The HR Digest.

Fox News Digital’s 2,273 number sits inside a broader pattern. An X post cited by The HR Digest observed that Microsoft has had close to 40,000 H-1B applications approved since 2020. That figure includes renewals and new hires; it is not a headcount of new foreign workers brought in over a single year.

In May Microsoft also rolled out a one-time voluntary retirement program for US employees, the first in the company’s history. More than 30% of eligible employees took the offer, per Chief People Officer Amy Coleman’s Monday email. The pool covered roughly 7% of Microsoft’s US workforce, about 8,750 people. The buyouts and the layoffs are running in parallel, which is what makes the optics so loud: every American taking a package is doing it while the company can still sponsor a fresh visa for a new hire.

Critics in Congress and on the Right

Political reaction arrived on Tuesday, a day after the layoff email. Vice President JD Vance, in Milwaukee, announced that the Department of Labor is launching an investigation into H-1B visa fraud. “Today, I’m proud to announce that the federal Department of Labor has started dozens of subpoenas and investigations into foreign fraudsters who are trying to take advantage of the H-1B visa program,” Vance said. “American jobs ought to go to American workers and not foreign fraudsters and the Department of Labor is fighting back against it.”

On Capitol Hill, Rep. Riley Moore, a West Virginia Republican, posted on X: “This is INSANE. LEGAL immigration is a major problem. These companies, especially big tech, are abusing these immigration programs to replace American workers with foreign workers. No more. It’s long past time to end the H-1B scam.”

The online anger was sharper. One X post, cited by Fox News Digital, read: “A great way to fix this is to throw anyone doing this in prison… Fire Americans to replace with thousands of visa workers? Straight to jail, and assets seized.” Another wrote: “It is the fault of our Government for approving the H-1Bs. Our Government has sold us out of jobs at home and those being moved to other countries.” The reaction sits against a recent federal-court ruling that blocked President Trump’s executive order imposing a $100,000 fee on H-1B applications, a fee that had been designed to push employers toward US hires.

What Xbox Looks Like After This

Microsoft framed the cuts as the reset that gets to a leaner Xbox. Asha Sharma’s directive: flatter management layers, smaller platform teams, halved vendor spend, and a focus on “great technology that gets better when it gets simpler.” The four spun-out studios take their IP and project backlogs with them.

The cuts are also tied to a broader AI-driven repositioning at Microsoft. Amy Coleman wrote: “The way technology is built, deployed, and used is transforming faster than at any point in my time here.” The restructure looks different when stacked against Microsoft’s $2.5 billion Frontier Company push to embed AI engineers inside customer enterprises. Sharma’s memo said Xbox will return to growth in 2027, a forecast that now sits a federal investigation away.