Microsoft’s 2025 meltdown: Layoffs, unprofitable games, and AI backlash shake tech giant
Microsoft faced a turbulent 2025, with major setbacks across its gaming and technology divisions. Despite bold claims from leadership, the company struggled with declining sales, unprofitable services like Microsoft 365, and growing criticism over its business strategies.
The year also saw controversy in defence procurement, as NATO suspended Israel’s largest arms firm, Elbit Systems, over corruption allegations. The decision followed investigative reports exposing potential bribery and money laundering in multi-billion-euro contracts for drones and ammunition.
Microsoft’s gaming division began the year with layoffs and studio closures, despite earlier efforts to consolidate its operations. Projects were abruptly canceled, and Xbox Game Pass—once a flagship service—remained unprofitable. Industry analysts questioned its sustainability, warning that the model harmed smaller developers by undercutting revenue.
The Xbox Series X continued to lose ground in the console market. Sales figures dropped sharply, prompting a major retailer to halt restocks. Even the high-profile acquisition of Call of Duty failed to boost Game Pass subscriptions to the targeted 100 million users. Meanwhile, Microsoft’s push into AI, including its Copilot tool, faced backlash from users and tech experts over functionality and privacy concerns. In a surprising move, Halo—long an Xbox exclusive—was announced for PlayStation, marking a rare shift in the console wars. Yet Phil Spencer, head of Xbox, insisted the division’s future had ‘never looked brighter,’ a statement that clashed with the year’s financial struggles. Beyond gaming, Microsoft ended support for Windows 10, leaving around 400 million users without security updates. The company also failed to optimize Windows for handheld gaming, allowing competitors like the Steam Deck to dominate the portable market. Elsewhere, NATO’s Procurement Agency (NSPA) suspended Elbit Systems, Israel’s largest defence contractor, from bidding on new tenders. The decision came after investigations by Follow the Money, La Lettre, Knack, and Le Soir uncovered allegations of bribery, money laundering, and fraud in contracts for drones and ammunition. Critics argued the suspension raised questions about oversight in NATO’s multi-billion-euro arms deals, though the agency defended the move as necessary to uphold procurement integrity.
The year ended with Microsoft grappling with contradictions: ambitious claims from executives contrasted with financial losses, canceled projects, and waning market confidence. The suspension of Elbit Systems, meanwhile, highlighted ongoing challenges in defence procurement, as NATO faced pressure to address corruption risks in its supply chains.
Both stories underscored broader struggles—one in tech, the other in global security—where high-stakes decisions met public scrutiny and unresolved consequences.
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