Xbox boss Phil Spencer is retiring, and his replacement is an AI executive who joined Microsoft in 2024

We sometimes say "it's the end of an era" to mark a notable occasion of one sort or another, and sometimes it's warranted and sometimes, not so much. In this case, though, it really is the end of an era: A Variety report says that after nearly 40 years at the company, Microsoft Gaming CEO Phil Spencer is retiring.

"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," Spencer wrote in a memo sent to employees. "It’s been an epic ride and truly the privilege of a lifetime."

"Last fall, I shared with [Microsoft CEO Satya Nadella] 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."

Spencer subsequently confirmed his retirement in a message on X.

Unexpectedly, Xbox president and heir apparent Sarah Bond, who joined the Xbox division in 2017, is not part of that plan: Bond has instead resigned from Microsoft outright. Matt Booty, currently the head of Microsoft Studios, is being promoted to chief content officer.

Spencer's position as Microsoft Gaming CEO will instead be taken over by Asha Sharma, who joined Microsoft in 2024 as president of its CoreAI product. Prior to that, Sharma served as chief operating officer at Instacart, and vice president of product and engineering at Meta. In a separate farewell message, Spencer said he's been working with Sharma for the past "several months," and that he has "tremendous confidence" in her ability to lead Microsoft Gaming. He also said he'll "remain in an advisory role through the summer to support a smooth handoff."

Despite her background in AI, Sharma said in her own message that Xbox "will not chase short-term efficiency or flood our ecosystem with soulless AI slop."

"The next 25 years belong to the teams who dare to build something surprising, something no one else is willing to try, and have the patience to see it through," Sharma wrote. "We have done this before, and I am here to help us do it again.

"I want to return to the renegade spirit that built Xbox in the first place. It will require us to relentlessly question everything, revisit processes, protect what works, and be brave enough to change what does not."

Spencer didn't say what he had in mind for his post-Xbox plans, except that he intends to "keep doing what’s always mattered so much to me: cheering on the teams pushing this industry forward and playing alongside this incredible community."