Microsoft’s new Xbox flagship combines Gaming Copilot for mobile and console, shaking up leadership

Microsoft is pulling the plug on its AI-powered Copilot assistant for Xbox, shutting down the feature on mobile and canceling its planned launch on consoles.

The pullback, announced on Tuesday by new Xbox CEO Asha Sharma, comes less than a year after the company released a gaming chatbot as a key part of its gaming AI, showing the limits of Microsoft’s strategy of embedding AI into every product.

Microsoft debuted Gaming Copilot at the Game Developers Conference in March 2025, pitching it as an AI sidekick that can offer gameplay tips, coaching, and picking up where players left off. The beta was launched on the Xbox mobile and PC apps and later on the ROG Xbox Ally handheld. A console version was expected to arrive later this year.

Sharma’s decision to kill the feature is in line with the AI ​​strategy he outlined on April 30 at X, where he said Xbox is “refocusing our AI efforts on solving player problems such as improving real-time graphics, improving accessibility, and deepening personalization.”

He pointed to Automatic Super Resolution, which improves image quality and background performance, as an example of AI done well – the difference with a chatbot approach.

It’s part of a broader shake-up by Sharma, who told employees in a memo Tuesday that he’s overhauling Xbox’s leadership team, including bringing in executives from Microsoft’s CoreAI engineering group where he previously worked.

“Xbox needs to move faster, deepen our connection with the community, and address the differences of both players and developers,” Sharma wrote in X, noting that the company has encouraged the leaders who helped build Xbox while bringing new voices to the gaming division.

According to CNBC, which has seen the memo, the changes include the addition of four CoreAI executives:

• Jared Palmer, formerly vice president of product at CoreAI and senior vice president at GitHub, will work on engineering, developer tools, and infrastructure.
• Tim Allen, vice president of design who previously led design and research at Instacart, will lead Xbox development.
• Jonathan McKay, former director of Meta and head of ChatGPT growth at OpenAI, will lead development for Xbox.
• Evan Chaki, general manager, will manage a forward-deployed engineering team focused on streamlining development.

In addition, David Schloss, senior director of product and growth at Instacart, will manage the Xbox subscription and cloud business.

Two executives with more than two decades each at Microsoft are leaving: Kevin Gammill, who oversaw Xbox user experience and game development platforms, and Roanne Sones, who led devices and ecosystem and will take a break before moving into an advisory role.

Sharma took over as CEO of Xbox in February, replacing Phil Spencer, who retired after 38 years at the company. He ran Microsoft’s CoreAI product organization and previously served as chief operating officer at Instacart and as vice president at Meta.

Since his arrival, he’s moved quickly, dropping Game Pass prices, dropping the “Microsoft Gaming” name in favor of Xbox, and embracing daily gamers as the division’s new internal success metric.

The changes come as Xbox faces continued revenue declines. Gaming revenue reached $5.3 billion in the latest quarter, down from $5.7 billion a year ago, and has declined in four of the past six quarters. Hardware revenue fell 33%.

Microsoft’s latest 10-Q filing also disclosed impairment charges in the games business, which means the company has written down a number of other gaming assets, suggesting that parts of its gaming portfolio are not performing as well as expected.

Sharma described the decision to withdraw Copilot from mobile and stop its development for consoles as part of a plan to “let go of features that don’t align with where we’re going.” His post did not mention the status of the Copilot beta on the Xbox PC app or the ROG Xbox Ally handheld.

This feature attracted skepticism from the beginning. Game writer Thomas Wilde called it “a solution in search of a problem” in a March 2025 review for GeekWire, asking if gamers wanted an AI chatbot alongside their games.

Recently, Wilde raised more concerns about a feature that pulls guide content from the open internet without attribution, writing that Gaming Copilot is “eating its own seed corn” by undermining the ecosystem of online guides it relies on.

The full life cycle of a feature, from announcement to cancellation, took about 14 months.