Bernie Sanders Slams Microsoft Xbox Layoffs and Price Hikes Over Tax Breaks

Senator Bernie Sanders has criticized Microsoft for its recent Xbox layoffs and for raising prices on its consoles, arguing that these moves show corporate tax incentives don’t actually translate into new jobs.

The Vermont senator, who is 84, pointed to Microsoft’s massive profits alongside the large tax reductions it has received, as well as the tens of millions it pays its CEO, Satya Nadella, claiming the situation proves tax breaks don’t drive hiring.

“Last year, Microsoft made $101 billion in profits, received a $12.5 billion tax break from Trump, and paid its CEO $96 million,” Sanders wrote on social media. “This year, it’s increasing the cost of an Xbox by $150 and cutting 3,200 jobs. Please don’t tell me corporate tax breaks create jobs. It never trickles down.”

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This week’s headlines come after Microsoft confirmed that 3,200 Xbox employees will lose their roles during the current fiscal year, with 1,600 impacted immediately and the remaining positions set to follow later—leaving many workers facing an extended period of uncertainty. The restructuring also includes the closure of four studios that were brought in to strengthen Game Pass with new releases during the Phil Spencer era, plus another studio that is reportedly in discussions about being sold or shut down.

The layoffs arrived shortly after Microsoft announced a major price adjustment for Xbox hardware, blaming the change on an ongoing “components crisis.” Starting on August 1, Xbox Series models will cost more: the 512GB version increases by $100, while the 1TB version rises by $150. Microsoft will discontinue the 2TB model.

In its 2025 fiscal year, which ended June 30, 2025, Microsoft posted record net income of $101.8 billion, up 16% compared with the prior year. That surge came alongside $281.7 billion in total revenue, supported by growth across Microsoft’s cloud, AI, and productivity segments.

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However, Sharma has also said the Xbox operation is struggling. The Xbox division reportedly ended the financial year with a 3% accountability margin, which is assumed to be profit margin, and that figure was lower than the year before. Excluding Activision Blizzard King, Microsoft spent more than $20 billion over the past five years on what Sharma described as a content, platform, and hardware “subsidy,” yet annual revenue during that same period reportedly fell by nearly half a billion dollars.

“We are operating at margins that are 3-10x lower than comparable platform and publishing businesses,” Sharma said in a blog post used to announce 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.”

Sanders’ comments are ultimately about more than Xbox alone—they’re aimed at Microsoft and his broader stance on corporate practices in America. Still, the timing matters: these Xbox cuts are part of a wider set of reductions at Microsoft. The company has said it plans to eliminate 4,800 roles in total, roughly 2.1% of its workforce, though Xbox appears to be taking the largest share of the impact.

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This isn’t the first time Sanders has weighed in on developments in the video game industry. In 2022, Sanders and three other U.S. senators raised objections to Microsoft’s 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 ultimately prevailed in its fight with the FTC regarding the $69 billion purchase of Activision Blizzard. The deal was expected to give Xbox a major boost as it tried to expand its gaming business. This week, Sharma conceded that the approach did not deliver the results Microsoft wanted.

In response to the layoffs, the Communications Workers of America (CWA) said it would work to protect the rights of Xbox staff who are affected.

“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,” said Claude Cummings Jr., President of CWA. “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 [email protected] or confidentially at [email protected].