Xbox Cancels Copilot AI Development, Overhauls Leadership Under New CEO
Key Takeaways
- ▸Xbox is discontinuing Copilot AI development on both mobile and console, shifting strategic focus away from AI assistant features to core gaming
- ▸New CEO Asha Sharma is recruiting executives from CoreAI and OpenAI to accelerate execution and drive strategic changes
- ▸The overhaul reflects Xbox's declining revenue and strategic pivot to streamline operations and deepen community connections
Summary
Xbox CEO Asha Sharma announced a major strategic shift for the gaming division, confirming that Microsoft will wind down Copilot AI development on mobile and halt console development entirely. The announcement came alongside sweeping leadership changes, including the departure of two veteran 24-year Microsoft executives and the arrival of new talent from CoreAI and OpenAI—including Jared Palmer (former GitHub SVP), Tim Allen (former CoreAI design lead), Jonathan McKay (former head of ChatGPT growth), and David Schloss (former Instacart director).
In a memo to staff shared publicly on X, Sharma emphasized that Xbox must move faster and deepen its connection with the community. "Right now, it is too hard to ship impact quickly. We spend too much time inward instead of with the community, and we lack the depth we need in some of the fundamentals," she wrote. The Copilot cancellation represents part of a broader effort to retire features misaligned with Xbox's strategic direction and focus on core gaming experiences.
The overhaul reflects Xbox's struggle with declining revenue. Sharma, who joined Microsoft in 2024 following executive roles at Meta and Instacart before leading product for CoreAI, has already made significant moves since becoming CEO in February—including reducing Game Pass Ultimate prices and announcing a new partnership with Discord. These changes signal a deliberate shift toward streamlining operations and prioritizing community engagement over experimental AI assistant features.
