Microsoft’s 60,000-Job AI Buyout Drives Major Restructuring

By Rebecca Stone

Microsoft is offering voluntary buyouts to about 60,000 employees across the US, UK, Canada and India, according to The Verge’s Tom Warren. It is Microsoft’s first exit offer on this scale, expanding on a retirement package for around 9,000 employees earlier this year.

What does Microsoft’s 60,000-person buyout mean?

Microsoft links the buyouts to lower operating costs and headcount without reducing AI infrastructure investment, Warren reported. The company wants fewer people to protect spending on computing capacity for its AI push.

Almost two years ago, Satya Nadella described the financial trade-off on a podcast: “Our total people costs will go down, our cost per head will go up, and my GPU per researcher will go up.” Warren read this as higher salaries, more tools and greater AI resources for remaining staff.

Microsoft has cut jobs regularly for a decade. Warren said recent layoffs now occur every few months, after 4,800 cuts a few months ago hit the Xbox and commercial sales teams hardest.

As of June 30, Microsoft employed around 223,000 people, 5,000 fewer than the 228,000 employed in 2025. Warren said this was the first year-over-year headcount decline in a decade; Microsoft cut 4 percent of its workforce in July last year.

More than 30 percent of the 9,000 people eligible for the earlier retirement package accepted. The newer offer covers about a quarter of Microsoft’s workforce and gives eligible employees until December to decide.

Sources familiar with the offer said its terms are practically the same as regular Microsoft severance: cash based on tenure, accelerated stock vesting, subsidized health coverage and several months of career services. Warren expected a lower acceptance rate than the retirement package.

Even if 5 percent accepts, Microsoft would shed 3,000 employees. Warren noted rumors of further layoffs in November and January, which could depend on the final exit total.

Former Microsoft Entra product manager Merill Fernando said: “Microsoft needs fewer people.” He added: “I’ve been on the inside. I’ve seen how things get built. Lots of small orgs. Layers on layers. Silos everywhere.”

He said each organization “had its own priorities and its own decision makers,” describing a structure that encouraged competing priorities across business units.

Nadella addressed Microsoft’s internal “pointing guns at each other” meme last year with Stripe co-founder John Collison. He said the comic defined the company’s culture “more so than reality,” though it reflected real divisional tensions.

“In some sense, some of these divisional tensions are real issues that need to have tension. Social cohesion is not a goal, winning in the marketplace is a goal,” Nadella said.

Warren framed the buyouts as a test of Nadella’s effort to reshape Microsoft for AI without discarding the empathy-centered culture associated with his leadership. Lower staff costs give Microsoft room to sustain AI infrastructure spending.

Will Forza Motorsport survive the studio merger?

Dan Greenawalt, the longtime creative force behind Forza Motorsport, is leaving after almost 27 years as head of Turn 10 Studios, according to Trevor Williams, studio head of Playground Games.

Williams said in an internal memo: “Dan Greenawalt has decided that this is the right time for him to retire from Microsoft.” Greenawalt will advise Williams and newly appointed Playground Games chief operating officer Michel Bastien while he transitions to his next phase.

“It’s hard to overstate Dan’s impact over the past 27 years. From shipping Project Gotham Racing on the original XBOX in 2001 to leading the creation of Forza, founding Turn 10 Studios and appearing so many times on our E3 stage, usually making a dramatic entrance with a supercar in tow –”

“and so much more – we owe tremendous thanks and gratitude to Dan. On behalf of both teams, I would like to thank Dan for his leadership, his support, and his partnership. I wish him well for whatever comes next.”

Microsoft revealed last month that it was merging its two Forza developers into one studio as part of a massive Xbox restructuring. Turn 10 Studios, the Forza Motorsport creator, merged with Forza Horizon developer Playground Games. The combined studio operates from Playground Games Leamington Spa and Playground Games Redmond.

With Greenawalt retiring and Turn 10 absorbed, Warren said it remains unclear whether Microsoft will return to Forza Motorsport. More than 70 Turn 10 employees were laid off last year, affecting most of the studio. Over the past year, Turn 10 essentially maintained the game; remaining staff moved to Playground Games to work on Forza Horizon and Fable.

Is The Elder Scrolls VI: Sentinel official?

Bethesda officially announced the sixth Elder Scrolls game more than eight years ago, but platform exclusivity debates continued without much detail. Sources familiar with its plans told Warren that the next game will be called The Elder Scrolls VI: Sentinel.

The announcement could come as soon as next month, during a period marking 15 years since The Elder Scrolls V: Skyrim was released. Warren expects only a name reveal, based on recent gameplay demonstrations and a live playthrough Xbox CEO Asha Sharma received in August.

Sharma praised the game’s scale and said “the story is even greater.” Warren understands Sentinel to be set in Hammerfell, a province previously seen in The Elder Scrolls Adventures: Redguard and The Elder Scrolls Online. He described it as the first game about Elder Scrolls history, designed to uncover secrets surrounding mysterious ancient artifacts.

What else changed across Microsoft?

• Xbox’s first chief operating officer, Helen Chiang, is leaving Microsoft after 21 years, Warren reported. She previously led Minecraft before becoming Xbox COO in July. Asha Sharma announced the departure last week: “Helen Chiang is leaving Microsoft today. I’m grateful for her years of service and wish her well.”

• Sharma said the COO role will remain: “we’ll share more on COO leadership as plans are finalized.” Eurogamer reported that Chiang had been “terminated for policy violations,” and Warren heard similar internal chatter. Several Xbox employees described her as highly respected with high integrity, leaving the cause unresolved.

• Microsoft’s firmware update for the Surface Laptop Ultra fixes screen flickering, unexpected restarts and lengthy reboot times, plus unspecified “additional bug fixes and general performance improvements.” Warren still wants action on the device’s laggy feel; neither Microsoft nor Nvidia has addressed it.

• Former GitHub CEO Thomas Dohmke launched Entire during GitHub Universe conference week, surprising GitHub employees, Warren reported. Developers can use it to host and review code, with support for AI agents.

• Entire replaces pull requests with “Trails,” offering “customizable evals that are scored by agents on every code push.” One GitHub employee said: “people are shocked, they have ambushed us up and down the stack on our own conference week.”

• Microsoft is replacing an earlier Windows 11 taskbar link to Bing with a native speed test. Users can right-click the network icon and run the test without opening a browser.

• Microsoft is also adding faster trackpad scrolling for long documents and webpages, continuous scrolling from the touchpad edge and single-finger scrolling in Windows 11.

Microsoft says its AI tool can diagnose conditions up to four times more accurately than human doctors. Science published the findings the previous week, based on scenarios drawn from medical case reports and emergency department data.

Microsoft AI CEO Mustafa Suleyman told The Verge: “It needs clinical validation,” adding: “That is a leap, but this is a major milestone along that journey.” Clinical validation remains necessary before broad deployment.

Security researchers at Enclave found an Android flaw that lets an unprivileged app with zero permissions impersonate any installed Microsoft first-party app and obtain its tokens. Stolen tokens could grant access to mailboxes, files and calendars. Microsoft has fixed the flaw; Android users should update Authenticator immediately.

Denmark’s Ministry of Digitalisation reportedly ended its trial of an open-source alternative to Microsoft Office after employees encountered document-formatting problems, blank pages and tracked changes. Last year, the government announced plans to replace Windows and Office with open-source alternatives to reduce reliance on US vendors.

Kotaku reported that Gears of War: E-Day cost “over $500 million” to make, excluding marketing. The game has the franchise’s highest Metacritic score and serves as a controversial test for any return to Xbox exclusivity.

One source told Warren that more than 400,000 copies of E-Day sold across Xbox and Steam. The unresolved questions include Game Pass performance and whether its revenue offset additional Xbox sales or a potential PS5 port.

Microsoft has discussed canceling Blade and shuttering Arkane, Warren previously reported. Talks about a sale to multiple publishers have continued since June, alongside consultations with the union representing Arkane Lyon employees.

Le Monde reported a November 13 decision deadline. Microsoft confirmed to PC Gamer that it extended the deadline by one month. Warren called the extension a reason for cautious optimism that Blade will be saved.

Microsoft is ending Copilot support on smart TVs after nearly two years. LG says the feature is “scheduled for discontinuation during 2026,” with the specific date “subject to Microsoft’s timeline.”

How are Microsoft’s AI and cloud bets performing?

Microsoft overhauled its financial reporting this quarter, placing Windows, Surface and Xbox in a separate bucket from its AI and cloud businesses, Warren reported. Windows OEM revenue fell 22 percent amid a RAMageddon crisis that left the overall PC market down 20 percent in the recent quarter. Xbox hardware, content and services also declined.

Azure contributed $33.17 billion of $92.3 billion in quarterly revenue, roughly one-third of the total, according to Warren.

Nadella said: “Our goal is to advance the cost to outcome frontier, which means delivering capabilities comparable to leading models within three to six months of their release at a fraction of the training cost, thereby allowing us to transfer those cost benefits to customers.”

Microsoft’s December exit total and next results will show whether lower people costs and faster model economics can fund the AI strategy without another round of product-team cuts.