Phil Spencer is exiting Microsoft as AI executive takes over Xbox

The gaming division of Microsoft is going through a massive shakeup. After 38 years at Microsoft and 12 years leading the Xbox brand, Phil Spencer is retiring from Microsoft. Alongside him, Xbox President Sarah Bond is also exiting the company, who many suspected would be Spencer's successor in leading Xbox.

The new Microsoft Gaming CEO has been confirmed to be Asha Sharma, who is the President of Microsoft’s CoreAI product. Before joining Microsoft in 2024, Sharma served as the chief operating officer of Instacart and vice president of product at Meta. She is also a board member at The Home Depot.

According to an internal email sent by Phil Spencer to Microsoft staff, via IGN, the plan to step away from the Xbox CEO role had come up in a conversation with Microsoft CEO Satya Nadella in 2025.

"When I walked through Microsoft’s doors as an intern in June of 1988, I could never have imagined the products I’d help build, the players and customers we’d serve, or the extraordinary teams I’d be lucky enough to join. It’s been an epic ride and truly the privilege of a lifetime," added Spencer. "I’ll be cheering you on in this next chapter as Xbox’s proudest fan and player."

In another internal email addressing staff, the new Microsoft Gaming CEO Asha Sharma gave some hints as to how the future of Xbox will look.

She outlined three commitments: "First, great games." "Second, the return of Xbox." and "Third, future of play." She went on to say that the company will continue to invest in its franchises and studios, keep Xbox spreading across platforms to reduce barriers, while also inventing "business models and new ways to play."

"As monetization and AI evolve and influence this future, we will not chase short-term efficiency or flood our ecosystem with soulless AI slop," Sharma added. "Games are and always will be art, crafted by humans, and created with the most innovative technology provided by us."

At the same time, the head of Xbox Game Studios, Matt Booty, has received a promotion. Now he will be directly reporting to Sharma as the Executive Vice President and Chief Content Officer.

Source

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Posted Saturday 21 February 2026 at 12:17 pm AEST (my time).

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