Phil Spencer, the longtime head of Microsoft’s gaming division and a key architect of the Xbox brand, has announced his retirement from the company after 38 years, effective February 23, 2026, marking a major leadership shakeup amid evolving challenges in the video game industry.
Spencer, who joined Microsoft as an intern in 1988 and rose to lead Xbox since 2014, shared the news in a LinkedIn post on February 20, 2026, reflecting on his journey: “It’s rare in life to know when a chapter is closing, but after 38 years at Microsoft, that moment has arrived for me. I’ve made the decision to retire and begin the next chapter of my life.” He will remain in an advisory role through the summer to ensure a smooth transition.
Asha Sharma, currently president of Microsoft’s CoreAI product and a former Instacart COO who joined Microsoft in 2024, will step in as the new CEO of Microsoft Gaming. In a surprising turn, Xbox President Sarah Bond is resigning and will not replace Spencer, while Xbox Game Studios head Matt Booty is being promoted to chief content officer.
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Microsoft CEO Satya Nadella praised Spencer’s contributions in an internal memo: “Last year, Phil Spencer made the decision to retire from the company, and since then we’ve been talking about succession planning. I want to thank Phil for his extraordinary leadership and partnership.” Spencer, who oversaw major acquisitions like Activision Blizzard in 2023, navigated Xbox through hardware launches, cloud gaming expansions, and industry shifts toward subscriptions.
The shakeup follows rumors of Spencer’s potential retirement circulating since fall 2025, and comes as Microsoft integrates AI more deeply into gaming, with Sharma’s background in AI product development signaling a strategic pivot.
Microsoft’s gaming division, bolstered by acquisitions, now faces a leadership transition at a time of industry consolidation and AI integration; Sharma’s ascent could accelerate Xbox’s pivot toward AI-driven experiences, but it marks the end of an era for one of gaming’s most influential figures.
