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Microsoft lays off nearly 5,000 employees across Xbox, commercial sales
8:32 AM PDT · July 6, 2026
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Microsoft cut around 4,800 roles, or 2.1% of its global workforce, on Monday — the latest in a series of layoffs that’s stoking fears that AI will replace people at companies.
The layoffs will hit Xbox and commercial sales the hardest, with Xbox losing 1,600 staffers today, according to memos shared with Microsoft’s staff.
Here’s a snippet from a memo from Amy Coleman, EVP and chief people officer:
“Our business is changing because the world around it is changing. The way technology is built, deployed, and used is transforming faster than at any point in my time here. Our customers’ needs are shifting, the business models that serve them are shifting, and that means the work itself – what we do, where we focus, and how we’re organized – has to transform too.
Companies don’t get to choose whether their industry changes; they only get to choose whether they change with it. That means we will need to adjust resources and roles and shift how we operate so we can have the greatest impact for our customers.”
Coleman stressed that the roles being eliminated today “are not being replaced by AI,” but noted, “what is true is that AI is changing how work gets done.”
“Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves,” Coleman wrote.
To many feeling the sting of unemployment, that’s a distinction without a difference.
The layoffs build on Microsoft’s recent launch of its Frontier Company business unit, which is focused on delivering enterprise AI deployments with the firm’s existing AI tools and an army of forward deployed engineers. That move is backed by a $2.5 billion investment, mirroring a common theme we’re seeing among layoffs this year — job cuts are correlating with increased AI spending.
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Speaking about the Xbox layoffs, Coleman said little: “We are restructuring to position the business for long-term success. Engineering teams across the company will also evolve their structure and priorities to meet customer needs and innovate for the future.”
Of today’s 4,800 layoffs at Microsoft, 1,600 will hit Xbox, with about 3,200 cuts in total expected through fiscal year 2027, according to Asha Sharma, CEO of Xbox. In an email she sent to employees on Monday, Sharma called this “the most significant restructure in Xbox history.”
“Our business today is not healthy,” Sharma wrote. “We are operating at margins that are 3–10x lower than comparable platform and publishing businesses.” She added that Xbox made bets like its monthly subscription service Game Pass, alongside moves to grow its portfolio of content and invest in multi-platform, among other attempts to breathe life into the business. None of those strategies grew at the expected pace, leading to the core business weakening even as Xbox added more teams and investment.
“And now the industry is facing the most severe hardware crisis in its history,” Sharma said. “We must reset Xbox.”
As part of the shift, Microsoft will transition four of its gaming studios to operate under new management, ensuring preservation of intellectual property and ongoing projects. Specifically Compulsion Games and Double Fine Productions will return to independent studios, according to Sharma. Ninja Theory and Undead Labs are coming under new ownership with funding to complete and grow some of their more popular games.
According to Sharma’s memo, Xbox is also flattening management hard, cutting the current 14 management layers to no more than five, but ideally three. As part of this major organization redesign, Xbox is making longtime executive Helen Chiang chief operating officer with end-to-end profit and loss authority across content, hardware, platform, and services.
Xbox’s restructuring plan centers around narrowing focus by dropping sprawling creative bets that don’t produce platform-scale returns, and instead homing in on core strategic pillars like Mojang and King, the businesses behind Minecraft and Candy Crush.
The Xbox layoffs come as the gaming industry shrinks amid new generative AI opportunities. Companies building world models — like Google DeepMind, World Labs, General Intuition, Luma AI, and Runway — have received millions in funding over the past year and garnered plenty of hype for their playable world model demos. All of those companies see gaming as a near-term opportunity for commercialization.
In April, Microsoft offered buyouts structured as voluntary separations to an undisclosed number of employees — some estimates put the number at around 5,500 — with the goal of building high-performing teams. Last year, Microsoft laid off about 15,000 employees across two rounds.
The eliminations are part of a series of layoffs in the tech industry that’s seen close to 154,000 people lose their jobs just in the first half of 2026, with Big Tech firms like Meta, Oracle, Amazon, and Cognizant cutting thousands of workers.
Microsoft said that along with Monday’s cuts, it’s working on ways to keep staff on by re-skilling workers or placing people in new roles.
“Over the past year, we have redeployed more than 4,000 employees into new roles, including another 500 this month,” Coleman said.
Microsoft did not immediately return a request for comment and more information.
This article has been updated with more details into the Xbox layoffs. It was originally published July 6, 2026 at 8:08 am PT.
Topics
AI, AI, Enterprise, Microsoft, tech layoffs, xbox
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Rebecca Bellan
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What is Bending Spoons? The little-known AOL and Vimeo owner that’s now public
6:33 AM PDT · July 5, 2026
Bending Spoons, the Milan-based tech conglomerate that made headlines for acquiring the likes of AOL and Vimeo, went public on the Nasdaq this week with a pop, briefly reaching a market capitalization over $25 billion.
While Bending Spoons stock has slightly slumped since then, its market cap remains double its previous private valuation of $11 billion, confirming investor appetite for its playbook and portfolio, which includes digital brands such as Meetup, Eventbrite, and WeTransfer.
Bending Spoons’ strategy shares similarities with private equity, with the difference that it holds onto the brands it acquires. Its focus is on making them more financially successful — with tech and AI, but also often through price hikes and layoffs that have caused controversy.
Speaking to TechCrunch, co-founder and chief product officer Matteo Danieli said some of the scrutiny was due to the fact that products such as Evernote were genuinely loved by their users. But he said that despite all the changes, customer retention has been “remarkably stable.”
The user base of Bending Spoons itself has grown significantly in its 13 years of existence, and particularly in the last couple of years. As of March 2026, its portfolio served over 500 million monthly active users and more than 9 million monthly paying customers, according to its filing.
This also goes against the idea that Bending Spoons acquires dead companies, a narrative that entrepreneur Joe Hyrkin has been battling since selling digital publishing platform Issuu to the Italians in 2024.
“’Old internet brands’ is the wrong frame,” Hyrkin wrote on LinkedIn after the IPO. “They acquire products with real customer behavior, then integrate them into a centralized system of product, engineering, data, monetization, AI, and operating discipline.” This seems to be working: Bending Spoons reported $1.31 billion revenue in 2025; but its market capitalization indicates that investors anticipate even more.
How did Bending Spoons start?
The little-known backstory is that Bending Spoons was born out of the remains of Evertale, a Copenhagen-based startup that participated in Disrupt SF 2011’s Startup Alley and raised seed funding for its photo-sharing app, Wink.
Evertale failed not long after, and investors were able to exit, but its founders and a couple of employees kept working together, initially on in-house apps. Soon enough, the team made its first acquisition, followed by many others, CEO and co-founder Luca Ferrari told the venture podcast 20VC in one of his rare interviews before the company decided to go public.
In 2020, Bending Spoons made an exception to its policy of no longer building its own products when it created and donated Immuni, Italy’s official COVID-19 contact-tracing app. But other than that, it has mostly been honing a formula: identifying a popular product it thinks it can improve inside and out, and buying it from owners who have reached their limits in some way.
This approach was long orthogonal to VC, and Bending Spoons remained bootstrapped for years. But it eventually raised equity financing several times, including in 2022, 2024 and 2025. Pre-IPO, it also had VIP backers like tech industry bigs Eric Schmidt, Mike Krieger, and Xavier Niel; and stars Andre Agassi, Bradley Cooper, Maluma, The Weeknd, and The Chainsmokers.
What happens after a Bending Spoons acquisition?
After the acquisition, Bending Spoons is anything but a passive owner, making changes to the products’ user experience and features, as well as to the underlying tech; monetization strategy, including pricing; and team organization, including headcount.
While this focus on efficiency and revenue overlaps with private equity strategies, Bending Spoons claims a key difference: It “aims to hold forever, and has never sold an acquired business.” It is building a live portfolio, not presiding over a tech graveyard.
What companies has Bending Spoons acquired?
While Bending Spoons acquired several companies between 2014 and 2021, including the AI-powered photo enhancer Remini, its most notable acquisitions happened more recently.
In 2022, it acquired Filmic, known for its popular video- and photo-editing apps, and laid off the entire staff in December 2023.
In a deal also announced in 2022 and finalized in early 2023, Bending Spoons also acquired Evernote, the note-taking app that had reportedly reached a $1 billion valuation before hitting trouble. Layoffs followed the acquisition, as well as cuts to Evernote’s free offering.
The first half of the following year, 2024, was particularly active, with the acquisition of Meetup, app maker Mosaic Group, and Hopin’s StreamYard all happening within six months.
In July 2024, it went on to acquire the publishing platform Issuu and the file transfer service WeTransfer, where it later cut staff and made changes to its free plan, introducing stricter limits. In December 2025, WeTransfer’s cofounder Nalden criticized Bending Spoons’ decisions and said he was building another file transfer service.
In November 2024, Bending Spoons announced it would spend $233 million on an all-cash take-private deal to acquire video platform Brightcove. The acquisitions continued apace in early 2025, with route planner Komoot and management software maker Harvest.
Bending Spoons also announced its intention to acquire Vimeo in a $1.38 billion all-cash deal, and soon after, to acquire AOL from Yahoo for an undisclosed amount. (Disclosure: Both AOL and Yahoo are former owners of TechCrunch, and Yahoo retains a small interest.)
In December 2025, Bending Spoons announced it would acquire yet another well-known brand: Eventbrite — and for only some $500 million, a far cry from the company’s $1.76 billion valuation when it went public in 2018.
The Vimeo deal closed in the latter half of 2025, and was followed by massive layoffs impacting most of the workforce including the entire video team. The acquisitions of AOL, Eventbrite and Tractive were also completed this year.
What’s next for Bending Spoons?
Four of Bending Spoons’ cofounders have remained at its helm over the years: Matteo Danieli, Luca Ferrari, Francesco Patarnello, and Luca Querella. The IPO made them billionaires, at least on paper, while retaining control of the company, with more than 80% of the voting power.
Some of their decisions will affect workers. According to the company, it added “1,830 full-time equivalent team members through the acquisitions of AOL, Eventbrite, and Vimeo” but has already “parted ways” with many, and will continue. “Once the transformations of the three businesses are substantially complete later in 2026, we expect only a few hundred to remain.”
This headcount reduction presumably won’t affect the number of “Spooners” — the term Bending Spoons reserves to some core team members that have gone through its highly selective hiring process. There are currently some 620 of them, but that number hasn’t grown fast: in 2025, it only made 286 hires out of some 800,000 job applications.
Core headcount may not have increased by much, but productivity has. “In part helped by progress in AI, revenue per full-time equivalent Spooner increased from $1.12 million in 2023 to $2.57 million in 2025, and was $0.97 million in Q1 2026,” the company said. It helped it escape the SaaS reckoning it now also hopes to benefit from.
“As many businesses struggle to adapt, our ability to expand the earnings of an acquired business may improve,” Bending Spoons observed. In addition, “an environment of greater uncertainty could provide opportunities for us to acquire businesses at more favorable valuations.”
Despite what it sees as a favorable moment, Bending Spoons has remained selective in its acquisitions, but keeps on a wide net. By its own reporting, it sourced over 2,500 acquisition opportunities in 2025, conducted in-depth analyses of approximately 200 of them, and completed six acquisitions. More will certainly follow — that’s the playbook.
“We’ve identified more than 1,000 digital businesses (both private and public) that could be attractive acquisition targets in the future, representing nearly $400 billion in aggregate estimated revenue in 2025,” Ferrari wrote in a letter on behalf of the Bending Spoons team.
The playbook hasn’t changed, but the hint at take-privates is a reminder that the company has gone from paying “$10,000 for our first acquisition” to now “pursuing acquisitions in the billions of dollars.”
What follows may be even more intense. “As AI enables us to accomplish more with fewer people, the scalability of our acquisition and transformation model should improve as well,” Ferrari predicted.
This story was originally published in October 2025 and is updated periodically with new information.
Topics
AOL, Bending Spoons, Europe, evergreens, Italy, Mergers and Acquisitions, Venture
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Anna Heim
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Anna Heim is a writer and editorial consultant.
You can contact or verify outreach from Anna by emailing annatechcrunch [at] gmail.com.
As a freelance reporter at TechCrunch since 2021, she has covered a large range of startup-related topics including AI, fintech & insurtech, SaaS & pricing, and global venture capital trends.
As of May 2025, her reporting for TechCrunch focuses on Europe’s most interesting startup stories.
Anna has moderated panels and conducted onstage interviews at industry events of all sizes, including major tech conferences such as TechCrunch Disrupt, 4YFN, South Summit, TNW Conference, VivaTech, and many more.
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