Sen. Bernie Sanders has hit out at Microsoft over the recent layoffs at Xbox as well as console price rises, insisting they’re evidence that corporate tax breaks do not create jobs.
Pointing to the billions of dollars of profit Microsoft makes alongside the billions in tax breaks it has received and the tens of millions it pays CEO Satya Nadella, the 84-year-old senator from Vermont claimed that the layoffs were proof that corporate tax breaks do not lead to job creation.
“Last year, Microsoft made $101 billion in profits, got a $12.5 billion tax break from Trump & paid its CEO $96 million,” Sanders tweeted. “This year, it’s raising the price of an Xbox by $150 & eliminating 3,200 jobs. Please don’t tell me corporate tax breaks create jobs. It never trickles down.”
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This week, Microsoft announced 3,200 staff at Xbox are set to lose their jobs this financial year, with 1,600 going now and the rest to follow — leaving thousands of employees with an anxious wait that could drag out for months. As part of the cuts, Microsoft has jettisoned four studios which were brought in to bolster Game Pass with new games under the Phil Spencer era, with another studio in negotiations to be sold or shut down.
The news followed the announcement of a significant price hike for Xbox consoles, which Microsoft blamed on the ongoing “components crisis.” The price rises, which start from August 1, will see the Xbox Series increase by $100 for 512GB models and $150 for 1TB models. The 2TB model will be discontinued.
In its 2025 financial year (ending June 30, 2025), Microsoft reported a record net income of $101.8 billion (a 16% increase year-over-year). This massive profit was generated on $281.7 billion in total revenue, driven by broad growth across Microsoft’s cloud, AI, and productivity segments.
Xbox Games Series Tier List
Xbox Games Series Tier List
Sharma has said the Xbox business, however, is struggling. Xbox ended the financial year with a 3% accountability margin (assumed to be profit margin), down year-over-year. Excluding Activision Blizzard King, over the past five years, Microsoft spent over $20 billion on ongoing investments in what Sharma called its content, platform, and hardware “subsidy,” but annual revenue has declined nearly half a billion during that time.
“We are operating at margins that are 3-10x lower than comparable platform and publishing businesses,” Sharma said in a blog post announcing the layoffs. “We entered Gen 9 with a smaller install base and a higher cost structure. To grow, we bet on Game Pass, multi-platform, and a broader portfolio of content. While those businesses have created meaningful value, they did not grow at the pace we expected. As that happened, our core business weakened, and we added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history. We must reset Xbox.”
And on Xbox console price rises, Microsoft has said console storage and memory prices have increased by more than 2.5x, and it expects another doubling by the fall of 2027. “The entire consumer electronics industry is struggling with the current components crisis, but the effects are particularly hard on consoles,” Microsoft said when it announced the price rises.
“… the industry is facing the most severe hardware crisis in its history,” Sharma added in the Xbox “Reset” memo.
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Of course, Sanders’ statement is less about Xbox specifically, and more about Microsoft and his views on corporate America. But it’s worth noting that this week’s layoffs at Xbox were a part of broader cuts across Microsoft. The company actually announced plans to cut 4,800 jobs — roughly 2.1% of its workforce — although clearly Xbox is bearing the brunt of the restructure.
This isn’t the first time Sanders has spoken out about the goings on in the video game industry. In 2022, Sanders and three other U.S. senators raised concerns about Microsoft’s then proposed acquisition of Activision Blizzard. “We are deeply concerned about consolidation in the tech industry and its impact on workers,” Elizabeth Warren, Bernie Sanders, Cory Booker, and Sheldon Whitehouse wrote.
Microsoft eventually won out in its battle with the FTC over the $69 billion acquisition of Activision Blizzard. That enormous buyout was meant to help Xbox grow its gaming business significantly. This week, Sharma admitted it had been a failure.
Responding to the layoffs, the Communications Workers of America (CWA) said they would fight for the rights of affected Xbox staff.
“When Microsoft sought to grow its video game division, corporate executives made an agreement with video game workers and their union, CWA, to respect their right to organize for a new day for workers across Microsoft’s video game studios,” Claude Cummings Jr., President of CWA, said. “Although our union signed neutrality agreements with Microsoft, we have been extremely disappointed by a company that has slow-walked our members at the bargaining table, making CWA members wait for the protections of a union contract.
“But make no mistake — whether our members have a contract in hand, or are still at the bargaining table, CWA members at Xbox have the power and protection of union membership. When Microsoft decides to treat the workers who built Xbox as expendable, it should know who they’re dealing with. This is not just a fight with the thousands of workers across Xbox; it’s a fight with each and every member at CWA — hundreds of thousands of people strong.”
Tom Williams/CQ-Roll Call, Inc via Getty Images.
Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.