XBOX tells employees business ‘not healthy’; Zuckerberg admits Meta’s AI push not going as expected

Greetings, comms pros! Let’s take a look at a few news stories from the last week and see what we can learn from them.

1. XBOX chief says business ‘spread too thin’ in layoff memo to employees

XBOX CEO Asha Sharma told employees that Microsoft’s console gaming division would reduce headcount by about 3,200 through the end of FY 27. In a memo to employees published on the XBOX website, Sharma claimed that the move did “not reflect the talent or dedication” of affected employees, but that business operations needed to change.

Our business today is not healthy. We are operating at margins that are 3-10x lower than comparable platform and publishing businesses. 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.

Sharma then detailed plans to reset XBOX’s content portfolio, platform and operations. Sharma also outlined an ambitious goal for XBOX at the memo’s conclusion.

I want XBOX to be one of the few companies that entertains more than a billion people each day and gives everyone the opportunity to create and connect. I know we can achieve this goal. XBOX has many of the most beloved franchises in entertainment history, talented studios around the world, and we will return to growth in 2027.

History is full of companies that mistake longevity for inevitability. We will not be one of them.

Sharma’s memo is blunt about XBOX’s financial situation. That’s key because it tells the reader that the job cuts are lessabout immediate cost savings and are instead part of a larger overhaul that needs to happen with XBOX’s business operations. The repeated use of the term “reset” frames the layoffs as a needed course correction. In addition, by stating that XBOX won’t be a company that will not “mistake longevity for inevitability” makes it clear that in Sharma’s view, XBOX’s reputation and history aren’t enough to protect it long-term.

While this isn’t a pleasant message for employees to receive, the transparency prepares them for the difficult road ahead. No one will be surprised by upcoming changes to strategy and team structure.

2. Meta’s Zuckerberg laments lack of immediate success in Meta’s AI pivot

Meta CEO Mark Zuckerberg admitted that the company’s AI push “hasn’t really accelerated the way we expected.’ Reuters obtained a recording of an internal town hall at Meta where Zuckerberg stated that the company’s recent layoffs were not “clean” and his AI vision hadn’t “come to fruition.

Zuckerberg’s comments are interesting because they run counter to the certainty about AI that so many executives express both internally and externally. He’s admitting that Meta’s AI pivot isn’t going as smoothly or quickly as anticipated, but the reader can also interpret Zuckerberg’s words as framing the problem as an investment that is still waiting for a payoff instead of misplaced strategy. By stating that the vision for AI at Meta “hasn’t come to fruition” yet, he leaves the door open for the payoff to come down the road, even as employees might experience more disruption. It’s also worth noting that just a few weeks ago when Meta let go of thousands of employees, Zuckerberg said that “AI is the most consequential technology of our lifetimes,” and ascribed some of the job cuts to automation. It’s clear that he’s bet really heavily on AI, and judging by the way he’s speaking, he’s still expecting his bet to hit.

3. Blue Origin CEO asks employees to view fundraising announcement ‘differently’

Jeff Bezos’ space exploration company Blue Origin confirmed to employees that the company was seeking external fundraising for the first time at a $130 billion valuation — but CEO Dave Limp reaffirmed to employees that focus should remain on the company’s work and mission in a memo obtained by Business Insider.

This has been in the works for some time and represents confidence in our mission, our strategy, and most importantly, the work each of you has done to build Blue into the company it is today. We are entering a period where opportunities in space are expanding rapidly. Securing this investment will be a clear vote of confidence from investors and validates the ambition and credibility of what we’re building for the long term. While the headlines will naturally focus on the dollars, I’d encourage all of us to think about today’s announcement differently. A valuation is not our mission. It’s not a finish line. It’s an assessment of what investors believe we can do together. What matters most will continue to be determined by our execution, our innovation, and our ability to deliver for customers.

By stating that “the valuation is not our mission,” Limp’s note separates the investor’s part of the story from the employee’s part of the story. However, by using language like describing investments as a “vote of confidence” and “what investors believe we can do together,” Limp affirms the importance of the occasion to employees and makes outside approval part of the message anyway. So while the note tells employees the number is not the point, it also raises the stakes of their work. Once outside investors are part of the story of the company, getting the job done is no longer just about fulfilling the mission. It’s also about proving that the confidence in the company was justified.

4. How about some good news?

• An 11-year-old in Kentucky rescued a man from drowning.
• A stolen Picasso work worth millions was recovered during a drug bust in Paris.
• Kelsey Pfendler became the first American woman to solo row from California to Hawaii, completing the journey in 44 days.
• Ragan Training is an excellent place for communications professionals to find inspiration and valuable resources.
• You should be rewarded for your work. Find out how to earn an award here!

Have a great weekend comms all-stars!

Sean Devlin is an editor at Ragan Communications.