Huge Xbox shakeup: Phil Spencer retiring, Sarah Bond resigns, Microsoft AI boss becomes new Microsoft Gaming CEO

Xbox is set to undergo huge management changes, with Phil Spencer retiring.

Spencer will step down as Microsoft Gaming CEO on Monday, February 23, the company announced on Friday.

Spencer will be replaced by Asha Sharma, who joined Microsoft in 2024 as president of its CoreAI product, which she describes as “leading the product portfolio for AI models, apps, agents, responsible AI, and developer tools for customers worldwide”.

Xbox president Sarah Bond, who some have assumed was being prepared to succeed Spencer as Microsoft Gaming CEO, has instead reportedly resigned from her role.

Xbox Game Studios head Matt Booty will also be promoted to chief content officer, working alongside Sharma.

In an email to Microsoft staff, Spencer wrote: “Last fall, I shared with Satya [Nadella, Microsoft CEO] that I was thinking about stepping back and starting the next chapter of my life. From that moment, we aligned on approaching this transition with intention, ensuring stability, and strengthening the foundation we’ve built.

“Xbox has always been more than a business. It’s a vibrant community of players, creators, and teams who care deeply about what we build and how we build it. And it deserves a thoughtful, deliberate plan for the road ahead.

“Today marks an exciting new chapter for Microsoft Gaming as Asha Sharma steps into the role of CEO, and I want to be the first to welcome her to this incredible team. Working with her over the past several months has given me tremendous confidence. She brings genuine curiosity, clarity and a deep commitment to understanding players, creators, and the decisions that shape our future.

“We know this is an important moment for our fans, partners, and team, and we’re committed to getting it right. I’ll remain in an advisory role through the summer to support a smooth handoff.”

In a separate statement on X, Spencer wrote: “It’s rare in life to know when a chapter is closing, but after 38 years at Microsoft, that moment has arrived for me. I’ve made the decision to retire and begin the next chapter of my life. It’s a milestone that’s given me a chance to reflect on the incredible journey I’ve been fortunate enough to share with so many of you.

“I’m excited for Asha Sharma as she steps into the CEO role. She’s joining an incredible group of people; teams full of talent, heart, and a deep commitment to the players they serve. Watching her lean in with curiosity and a real desire to strengthen the foundation we’ve built gives me confidence that our Xbox communities will be well supported in the years ahead.

“Thinking back to my start as an intern in 1988, I never could have imagined the path ahead. I’ve been lucky to work with so many passionate creators, partners, colleagues, and players across the industry; people who challenged me, taught me, and made this work full of joy and wonder. Thank you to everyone who’s been part of this chapter. This community has meant more to me than I can say.

“From here, I’ll keep doing what’s always mattered so much to me: cheering on the teams pushing this industry forward and playing alongside this incredible community. I’ll see you online.”

Sharma also reportedly emailed Microsoft staff, explaining her expectations for Xbox as she steps into Spencer’s role as Microsoft Gaming CEO on Monday. “My first job is simple: understand what makes this work and protect it,” she wrote.

Sharma said Xbox has to make three commitments in order to ensure future success, the first being “great games”.

“Everything begins here,” she said. “We must have great games beloved by players before we do anything. Unforgettable characters, stories that make us feel, innovative game play, and creative excellence.

“We will empower our studios, invest in iconic franchises, and back bold new ideas. We will take risks. We will enter new categories and markets where we can add real value, grounded in what players care about most.

“I promoted Matt Booty in honor of this commitment. He understands the craft and the challenges of building great games, has led teams that deliver award-winning work, and has earned the trust of game developers across the industry.”

The second commitment, according to Sharma, is the “return of Xbox”, while also maintaining the brand’s current policy of multiformat releases.

“We will recommit to our core Xbox fans and players, those who have invested with us for the past 25 years, and to the developers who build the expansive universes and experiences that are embraced by players across the world,” she explained.

“We will celebrate our roots with a renewed commitment to Xbox starting with console which has shaped who we are. It connects us to the players and fans who invest in Xbox, and to the developers who build ambitious experiences for it.

“Gaming now lives across devices, not within the limits of any single piece of hardware. As we expand across PC, mobile, and cloud, Xbox should feel seamless, instant, and worthy of the communities we serve. We will break down barriers so developers can build once and reach players everywhere without compromise.”

Finally, Sharma stated that the Xbox will commit to the “future of play”, specifically noting that Xbox would not focus on “soulless AI slop”, a notable comment given the CoreAI role she is about to depart from.

“We are witnessing the reinvention of play,” she wrote. “To meet the moment, we will invent new business models and new ways to play by leaning into what we already have: iconic teams, characters, and worlds that people love.

“But we will not treat those worlds as static IP to milk and monetize. We will build a shared platform and tools that empower developers and players to create and share their own stories.

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

“As monetization and AI evolve and influence this future, we will not chase short-term efficiency or flood our ecosystem with soulless AI slop” – Asha Sharma

In July last year, Microsoft denied claims that Phil Spencer was set to step down, stating that the exec “isn’t retiring any time soon”. If Spencer’s latest email is accurate, he informed Microsoft CEO Satya Nadella of his plans to retire “last fall”, meaning some time after Microsoft’s statement was made.

Spencer, who turned 58 in January, has worked at Microsoft since 1988. He joined the Xbox team in 2001, before assuming the role of general manager of Microsoft Studios in 2008. In 2014, Spencer was promoted to lead Xbox, Xbox Live, the now-defunct Groove Music, Movies & TV, and Microsoft Studios.

It was during this time that Spencer attempted to steady the ship following the disastrous Xbox One launch and the ousting of Don Mattrick. In 2022, Spencer would again be promoted to the new position of CEO of Microsoft Gaming. This came as Microsoft declared its intent to acquire Activision Blizzard.

In another email to Microsoft staff, CEO Satya Nadella stated: “I want to thank Phil for his extraordinary leadership and partnership. Over 38 years at Microsoft, including 12 years leading Gaming, Phil helped transform what we do and how we do it.”