Phil Spencer is retiring from Microsoft after 38 years with the company, including 12 years leading its gaming division. Alongside his departure, Xbox president and chief operating officer Sarah Bond has also announced she is leaving Microsoft to begin a new chapter. The news was shared with Microsoft staff through a series of internal emails.

Asha Sharma, who has spent the last two years at Microsoft, will step into the role of CEO of Microsoft Gaming, reporting directly to Microsoft CEO Satya Nadella. Matt Booty, who currently leads Xbox Game Studios, is being promoted to Executive Vice President and Chief Content Officer, reporting to Sharma.

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. It’s a milestone that’s given me a chance to reflect on the incredible journey I’ve been…

— Phil Spencer (@XboxP3) February 20, 2026

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Spencer first joined Microsoft as an intern in June 1988 and rose through the ranks over nearly four decades. In his note to staff, Spencer said he shared his plans with Nadella last fall. “Last fall, I shared with Satya that I was thinking about stepping back and starting the next chapter of my life,” he wrote. He will remain in an advisory role through the summer to help with the handover. Sarah Bond, who served as Xbox president, is also leaving the company. Spencer credited her with shaping Xbox’s platform strategy, expanding Game Pass and cloud gaming, and guiding the division through some of its most significant moments in recent years.

Before joining Microsoft two years ago, Sharma served as Chief Operating Officer at Instacart and as a Vice President at Meta. In her message to the team, she laid out three main priorities: delivering great games, recommitting to Xbox and its core fans, and exploring new ways to play as the industry evolves.

Matt Booty, whose career has been built around game development, will oversee a studios organization that now spans nearly 40 teams across Xbox, Bethesda, Activision Blizzard, and King. Those studios are home to franchises like Halo, The Elder Scrolls, Call of Duty, World of Warcraft, Diablo, Candy Crush, and Fallout. Booty confirmed in his note that there are no organizational changes planned for the studios at this time.

Nadella expressed confidence in the direction ahead. “We have extraordinary creative talent across our studios and a global platform that is second to none,” he said. Microsoft Gaming currently reaches over 500 million monthly active users and publishes games across multiple platforms.