Microsoft, which claims to look after its staff and brands itself a good place to work, is facing a fresh backlash after thousands of workers were sacked recently in mass layoffs with more tipped to come according to unions who have described the Companies actions as treating employees as “disposable”.

Th move by gamers to move away from console gaming is hitting the Company’s struggling Xbox and gaming division.

Unions representing Microsoft workers have come out in support of staff at Xbox, where employees claim they are simply being “dumped”.

The fallout from years of poor management decisions at the Companies gaming division, which is now moving to build Chinese AI software into its Copilot offering and embedding the same technology into its gaming products, is being felt around the world, with Microsoft management overnight pulling out of a deal to fund and publish a game with IO Interactive, the Danish studio behind Hitman and the recent hit 007 First Light.

IO Interactive will continue developing the game, code-named Project Fantasy, without Microsoft, but has not said whether it has the funds to remain a viable operation. The studio is now shopping for new backers.

Xbox said it is “taking a fresh look at where we invest so we’re focusing on our highest priorities,” according to a company spokesperson.

In practice, that appears to mean dumping staff around the world after the Company spent billions on what now looks like a failed gaming strategy.

At an online press conference, a union representative said staff within Microsoft’s games business “will not be treated as disposable”.

He went further, claiming the Xbox giant has no shortage of money, pointing to the recent console price increases that have generated millions in additional revenue.

Sherveen Uduwana, from United Video Game Workers, highlighted the huge sums being spent on executive compensation, citing Satya Nadella’s $96.5 million pay packet for the last financial year.

Diablo 4 senior environment artist Mahreen Fatima noted that Microsoft has poured massive amounts of money into artificial intelligence, despite businesses largely shunning Microsoft’s AI offerings. “They’re just choosing not to protect us,” she said.

Acre added that the money is there, and that leadership is simply choosing where it goes and who pays the price.

In a statement, an Xbox spokesperson said the Company respects “the right of our team members to make their voices heard”.

ChannelNews previously reported that Xbox was planning layoffs as new CEO Asha Sharma (seen above)  moves to redirect the business. There is also reporting that Microsoft was looking to close Compulsion Games, while Double Fine and Ninja Theory could also be shut down. The Verge has reported that Ninja Theory has told staff the studio is now looking for a buyer.

Double Fine recently became the latest Microsoft subsidiary to unionise, as Microsoft battles to recover from consumers dumping Xbox for rival gaming platforms.

In a statement on social media, IO Interactive said it has “to adapt to this new reality and its short-term consequences, including staffing decisions”. The studio first announced it was working on the role playing game Project Fantasy in early 2023.

The cancellation of the deal comes as Xbox prepares for significant job cuts expected to begin July 6. New CEO Asha Sharma, who took the role in February, is overseeing what she has called a “reset” that may lead to the closure of several subsidiaries.

IO Interactive’s 007 First Light, released in May, was critically acclaimed and has sold more than three million copies.