U.S. Senator Bernie Sanders has publicly criticized Microsoft, specifically targeting the company's recent mass layoffs and increases in Xbox console prices. Sanders highlighted that Microsoft generated over $100 billion in profit for the fiscal year, with CEO Satya Nadella receiving a substantial salary. He also pointed to a significant tax savings for Microsoft, estimated at $12.5 billion due to tax reforms, and argued that this did not translate into job creation.
The senator's remarks followed Microsoft's announcement of widespread layoffs, impacting 4,800 employees, with 3,200 of those affected working within the Xbox division. He specifically called out the price increase for the Xbox Series X, which now retails for $800.
For the fiscal year in question, Microsoft reported $101.8 billion in profit, marking a 16% increase on revenues of $281.7 billion, a 15% rise. However, commentary from Xbox CEO Asha Sharma suggests the Xbox business itself is facing financial challenges. Sharma described the Xbox division as "not healthy," indicating that strategic decisions made by previous leadership, including Phil Spencer and Sarah Bond, did not yield the expected results. According to Sharma, Xbox's operating margins are considerably lower than those of comparable businesses, operating at approximately 3%, meaning for every $100 generated, only $3 remains as profit, a stark contrast to Microsoft's other business units which boast profit margins exceeding 40%.
These financial pressures have coincided with a downturn in Microsoft's stock performance. The company's stock price has fallen 19% year-to-date and over 22% in the past year, with June 2026 marking its worst monthly performance since December 2000.
Sharma attributed some of these difficulties to strategic initiatives that did not meet expectations, including the Xbox Game Pass subscription service, the decision to release games on competing platforms, and acquisitions of game studios. Reports have indicated internal concerns among some Xbox employees regarding the strategy of introducing new titles to Game Pass, a concern that was reportedly overridden by management. In addition to the layoffs, Xbox is also divesting several studios. Double Fine and Compulsion are being spun off to regain independence, while Ninja Theory and Undead Labs are slated for sale. Arkane Lyon is currently undergoing a consultation process to determine its future and that of its upcoming game, Marvel's Blade.