Microsoft defends Asha Sharma after Xbox layoffs spark H-1B backlash

Microsoft defended Asha Sharma after online backlash linked her to Xbox’s cut of about 3,200 jobs, saying the H-1B allegations aimed at her had nothing to do with the gaming division’s restructuring. The company also said it was eliminating 4,800 jobs across Microsoft, about 2.1% of its workforce, in a broader move from its Redmond, Washington, headquarters.

Chief People Officer Amy Coleman said Microsoft was not replacing the layoffs with artificial intelligence. The company had already begun offering voluntary buyouts to about 8,750 employees in May, and more than 30% of eligible workers accepted. Inside Xbox, managers said the division’s headcount growth had left teams, studios, and functions more fragmented, making it harder to coordinate around shared goals and tradeoffs.

That explanation did little to slow the backlash online. Sharma was hit with racist and anti-immigrant attacks, including claims that she was taking away American jobs, and critics seized on H-1B visas as a proxy for broader anxiety about tech layoffs and foreign-born workers. Microsoft said the visa figures being circulated were Microsoft-wide renewals and new-hire applications, not Xbox-specific, and represented only a small share of the company’s overall workforce.

The uproar intensified because Sharma was also named to a Federal Reserve advisory role during the same stretch, giving the story a second life on social media. The mix of a high-profile corporate layoff, immigration politics, and identity-driven backlash turned a routine restructuring notice into a flashpoint far beyond Microsoft’s gaming business.

The cuts also landed in a division already under pressure. Separate reporting said 136 workers were laid off at id Software, one of the studios in Xbox’s orbit. Other accounts said Xbox hardware sales had fallen 29% year over year in the first quarter of 2026 and 22% in the fourth quarter of 2025, underscoring the business strain behind the reset.

Microsoft’s message was that the layoffs came from a fragmented organization trying to reorganize, not from AI replacement and not from Xbox-specific visa hiring.