Xbox Kills Copilot AI, Then Hires Five AI Execs

On the same day, in the same memo cycle, Xbox CEO Asha Sharma killed one AI initiative and installed four executives from Microsoft's AI division into senior Xbox roles. If you're trying to read a coherent signal from that, good luck.

Sharma confirmed on X that Xbox will begin winding down Copilot on mobile and halt Copilot development on console entirely. "You'll see us begin to retire features that don't align with where we're headed," she wrote. Gaming Copilot, the AI chatbot beta that was supposed to serve as an in-game guide and recommendation engine, never even made it to consoles. As recently as March, a Microsoft product manager announced at GDC that Copilot would come to current-gen consoles later this year. Two months later, it's dead.

That would be a clean story about a new CEO trimming bloat and refocusing on players. Except hours earlier, CNBC reported that Sharma had tapped at least four former colleagues from Microsoft's CoreAI division for key Xbox leadership positions. Jared Palmer, formerly a CoreAI vice president, becomes VP of engineering and a direct technical advisor to Sharma. Tim Allen, who led design and research at CoreAI and GitHub, takes over Xbox design. Jonathan McKay, previously head of growth for ChatGPT at OpenAI, is now Xbox's head of growth. Evan Chaki, a CoreAI general manager, will lead a new "forward-deployed engineering group focused on removing repetitive work." A fifth hire, David Schloss from Instacart, takes charge of subscriptions and cloud.

Five In, Two Out

Two longtime Microsoft executives are leaving as part of the reshuffle. Kevin Gammill, corporate vice president for Xbox user experience and publishing platforms, is departing after 24 years. Roanne Sones, corporate vice president for Xbox devices and ecosystem, will take a leave of absence this summer before shifting to an advisory role. She also spent 24 years at the company. Replacing institutional Xbox knowledge with AI-division leadership that will define Sharma's tenure one way or another.

In her memo to staff, Sharma wrote that Xbox needs to "evolve how we work and how we are organized." She added: "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." I don't disagree with the diagnosis. Xbox's last quarterly earnings showed a second consecutive 30%+ decline in hardware revenue and an overall 5% drop in Xbox revenue. Something clearly needs to change.

But the contradiction here is real, and I don't think you can wave it away by saying executives just bring people they know. Killing the consumer-facing AI feature while stacking leadership with AI veterans suggests Sharma sees AI as an internal operational tool rather than a player-facing product. That framing makes more sense: use AI to speed up development pipelines and tooling behind the scenes, stop trying to sell players an AI chatbot nobody asked for. If that's the actual strategy, it's a reasonable one. Sharma just hasn't said it that clearly yet, and of the announcement created exactly the confusion you'd expect.

Sharma has been in the job since February and has already cut Game Pass Ultimate's price, ended the "This is an Xbox" marketing campaign, announced Project Helix, and started publicly questioning Xbox's approach to exclusivity. She's moving fast. Whether all of these moves are pulling in the same direction is the part I'm still trying to figure out, and yesterday's announcements didn't make it any easier. Xbox's FY26 Q3 earnings already painted a grim picture; Sharma's next quarter will be the first one that's actually hers to own.