Microsoft’s Layoffs at King Lead to Toxic Leadership Allegations, Mandatory AI Use, and Low Morale

Last month, MobileGamer.biz reported that Microsoft’s sweeping layoffs of more than 9,000 employees across the company hit King, the mobile game studio acquired alongside Activision Blizzard and best known as the home of Candy Crush. Roughly 200 King developers were cut, and many were reportedly replaced by the same AI tools they had been tasked with building. Now, a follow-up investigation sheds further light on the chaos within King, alleging toxic leadership, incoherent layoff logic, and the demoralizing effects of Microsoft’s mandatory AI policies.

The report paints a picture of a studio in turmoil. Layoffs, already devastating for morale, are described as not only poorly communicated but targeted in ways that made little sense to staff. One source said bluntly that “performance didn’t matter,” noting that even employees with more than a decade of contributions and multiple promotions were among those cut.

King’s leadership justified the layoffs by citing an overly “heavy management layer” and “inefficient product development.” Yet, according to several sources, those reasons did not align with the staff who were let go. Some of the dismissed employees were reportedly rehired shortly afterward, raising further questions about the decision-making process. One source speculated that certain staff were promoted to middle-management roles just months before being laid off, so their removal would help justify Microsoft’s narrative. Another said the selection resembled executives “listing every employee, sorting by salary and then firing them top down, only skipping over people they trust.”

Culture of Fear and Failing HR

The layoffs appear to have amplified an already toxic culture at King. Anonymous employee feedback, once a way to report issues without fear, is said to have been eliminated. “Every question or piece of feedback was always connected to a name, which scared a lot of people, rightfully so,” explained one manager, who noted they were pressured to reveal names even when trying to report issues anonymously.

Multiple sources described King’s HR department as ineffective and complicit. One was blunt, calling it “a shitshow of incompetent people protecting the status quo of incompetent leaders.” Another added that HR “has often protected toxic leaders and put pressure on the ‘difficult’ employees for reporting the issue,” with outspoken staff allegedly targeted on several occasions.

Mandatory AI Use and the Push to 100%

In addition to the layoffs, Microsoft’s mandate that King staff use AI daily has cast a long shadow over the studio. Sources explained that last year, the target was 70–80% daily AI usage across general tasks, while this year the goal was increased to 100%. That requirement covers nearly every role: artists, designers, developers, and even managers.

“AI was being introduced by Microsoft as mandatory a while ago,” said one source. “The goal was to get up to 100% daily usage.”

This forced reliance on AI, combined with the replacement of laid-off employees with the very tools they developed, has intensified the sense of alienation and dissatisfaction among those still at King. One source even speculated that more layoffs are still to come.

The Broader Industry Picture

The situation at King is just one part of the larger wave of layoffs hitting Microsoft and the gaming industry as a whole. Over the past few years, mass layoffs have become alarmingly frequent across major studios and publishers. The fallout is not just immediate but structural: talent pipelines are disrupted, morale is crushed, and trust in leadership erodes.

As one source put it, Microsoft’s handling of King “is endemic of the leadership team at King,” with AI mandates and poor communication worsening an already toxic environment. The long-term repercussions of these choices will not only shape King’s future but could influence how AI and workforce relations develop across the wider games industry.

Do you think Microsoft’s mandatory AI push is helping game development efficiency, or harming creativity and morale?