Microsoft closes Copilot for Xbox and changes strategy

The change comes just months after Sharma took charge of Xbox in February, replacing Phil Spencer. Since then, the executive has made relevant changes to the division’s structure.

Strategic change at Xbox

The announced reorganization includes the entry of executives from Microsoft’s CoreAI team into the Xbox division, an area where Sharma previously worked. According to the executive, the objective is to accelerate the pace of development and improve relationships with players and developers.

In a post on Network X, Sharma stated that Xbox needs to “move faster, deepen community connection, and address friction for both players and developers.”

Xbox needs to move faster, deepen our connection with the community, and address friction for both players and developers.
Today, we promoted leaders who helped build Xbox, while also bringing in new voices to help push us forward. This balance is important as we get the business…

— Asha (@asha_shar) May 5, 2026

The executive also highlighted changes in the team’s leadership. According to her, there was promotion of professionals who helped build the platform, at the same time as new names were incorporated to boost the strategy.

Copilot is no longer part of the plans

Within this restructuring, Microsoft decided discontinue initiatives that do not align with the new direction. Among them is Copilot aimed at games.

“We will begin shutting down Copilot on mobile and stopping development of Copilot on console,” said Sharma.

The decision represents a change from previously announced plans. Last year, the company highlighted Copilot for gaming as a relevant bet and, in March, it had announced that the tool would reach current generation consoles later this year.

With the new direction, this implementation will no longer be carried forward.