Microsoft Says January 2026 Rumors Are “100 Percent Made Up”

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Recent rumors about Microsoft’s Xbox planning thousands of layoffs in January are false, according to the company’s Chief Communications Officer. While the tech giant has seen both success – becoming the world’s largest game publisher – and challenges, including struggles with hardware and a reputation for cancellations and layoffs, it appears Xbox will avoid another large-scale job reduction for now.

During the summer of 2025, Microsoft eliminated around 4% of its global workforce, impacting thousands of employees. This resulted in the cancellation of several game projects and the closure of multiple development studios – marking the largest single round of layoffs at the company since 2023. Microsoft has experienced several waves of layoffs in recent years, so rumors of further cuts weren’t surprising. However, recent reports suggest these predictions might have been incorrect.

Microsoft CCO Says Xbox Layoff Rumors are ‘100 Percent Made Up‘

When rumors surfaced about layoffs linked to the increasing costs of AI, Microsoft’s Chief Communications Officer, Frank X. Shaw, dismissed them as false on X (formerly Twitter). This followed a similar denial from industry insider Jez Corden, specifically regarding Xbox. While it’s not certain if Shaw’s statement only applies to Xbox – the original rumor mentioned cuts across Xbox, Azure Cloud, and sales – his strong denial implies the entire report is inaccurate. However, the rumors likely arose because Xbox previously replaced hundreds of employees with AI in 2025, and Microsoft has been actively promoting the technology.

Despite concerns about increasing costs related to AI, there’s reason to think Xbox can manage them without more job cuts. Microsoft CEO Satya Nadella stated the company was doing well financially after the previously announced layoffs for 2025, and recent reports confirm a record-breaking year with profits reaching $128.5 billion – a 17% increase. While Microsoft did see double-digit profit growth in 2024 as well, it’s important to remember that strong financial performance doesn’t always guarantee job security.

Image via Xbox

While Xbox isn’t currently planning layoffs in January, the company is clearly very excited about the potential of artificial intelligence. Microsoft’s CEO, Satya Nadella, has suggested AI could eventually be used to create entire games, and we’re already seeing it used in popular franchises like Call of Duty and Halo. It’s unclear if this increased use of AI will lead to job losses, and it’s a hot topic among both gamers and people working in the industry. Some believe AI can help developers save time and money, while others worry about potential job impacts and copyright issues for independent artists.

Image via Activision

Although Microsoft isn’t planning layoffs this month, job cuts are becoming a common problem in the video game industry. Last year, Amazon eliminated over 14,000 positions, including many in its gaming division, and companies like Funcom, Crystal Dynamics, and EA also reduced their workforces. This is happening at a strange time – video games are more popular than ever, but many studios, both big and small, are struggling with increasing development costs and tough competition. It remains to be seen how the situation will evolve.

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2026-01-08 19:34