Microsoft CEO Satya Nadella has announced Phil Spencer’s retirement, naming Asha Sharma as the next head of Microsoft Gaming – and Xbox president Sarah Bond is also leaving the company.

According to The Verge, Phil Spencer is stepping down after nearly four decades at Microsoft. Nadella informed employees in an internal memo that Asha Sharma – currently president of CoreAI product – will take over as CEO of Microsoft Gaming. Spencer will remain in an advisory role through the summer to support the transition.

The shakeup goes beyond Spencer. The report says Sarah Bond, the president of Xbox, is also departing to “begin a new chapter.” At the same time, Matt Booty is being elevated to EVP and chief content officer, expanding his remit over game content and studios.

Sharma is not best known as a gaming executive, but she brings deep platform and product leadership experience. She previously held senior roles at Meta and served as COO at Instacart, before rejoining Microsoft in 2024 and working closely on its AI platform efforts. Nadella framed gaming as central to Microsoft’s consumer ambitions and positioned Sharma’s background as key for the division’s next phase.

In his own note, Spencer said he first raised the idea of stepping back with Nadella in the fall of 2025, and the two aligned on a deliberate succession plan aimed at stability. The timing is notable because Microsoft publicly stated in July 2025 that Spencer was “not retiring anytime soon.”

Spencer joined Microsoft as an intern in 1988, moved into the Xbox organization in 2001, and became the division’s leader in 2014. His tenure includes the launches of Xbox Series X|S, the push behind Game Pass and cloud gaming, and major acquisitions such as Activision Blizzard, ZeniMax Media, and Mojang.

Source: The Verge