Microsoft is pulling the plug on its AI-powered Copilot assistant for Xbox, winding down the feature on mobile and canceling its planned launch on consoles.
The pullback, announced Tuesday by new Xbox CEO Asha Sharma, comes barely a year after the company debuted the gaming chatbot as a centerpiece of its AI push into gaming, demonstrating the limits of Microsoft’s strategy of embedding AI across its product lineup.
Microsoft first unveiled Copilot for Gaming at the Game Developers Conference in March 2025, pitching it as an AI sidekick that could offer gameplay tips, coaching, and recaps of where players left off. A beta launched on the Xbox mobile and PC apps and later on the ROG Xbox Ally handheld. The console version was expected to arrive later this year.
Sharma’s decision to kill the feature aligns with the AI strategy she outlined in an April 30 post on X, where she said Xbox was “refocusing our AI efforts to solving player problems like enhancing real-time graphics, improving discovery, and deepening personalization.”
She pointed to Automatic Super Resolution, which boosts image quality and performance in the background, as an example of AI done right — a contrast with the chatbot approach.
It’s part of a broader set of changes by Sharma, who told employees in a memo Tuesday that she’s overhauling Xbox’s leadership team, including bringing in executives from the Microsoft CoreAI engineering group where she previously worked.
“Xbox needs to move faster, deepen our connection with the community, and address friction for both players and developers,” Sharma wrote on X, noting that the company promoted leaders who helped build Xbox while bringing in new voices to the gaming unit.
According to CNBC, which saw the memo, the changes include the addition of four executives from CoreAI:
- Jared Palmer, formerly a vice president of product in CoreAI and a senior vice president at GitHub, will work on engineering, developer tools, and infrastructure.
- Tim Allen, a vice president of design who previously led design and research at Instacart, will lead Xbox design.
- Jonathan McKay, a former Meta director and head of growth for ChatGPT at OpenAI, will lead Xbox growth.
- Evan Chaki, a general manager, will run a forward-deployed engineering team focused on simplifying development.
In addition, David Schloss, a senior director of product and growth at Instacart, will take charge of Xbox’s subscription and cloud business.
Two execs with more than two decades each at Microsoft are departing: Kevin Gammill, who oversaw Xbox user experience and game development platforms, and Roanne Sones, who led devices and ecosystem and will take a leave of absence before moving to an advisory role.
Sharma took over as Xbox CEO in February, replacing Phil Spencer, who retired after 38 years at the company. She had been running Microsoft’s CoreAI product organization and previously served as chief operating officer at Instacart and as a vice president at Meta.
Since arriving, she has moved quickly, cutting Game Pass prices, dropping the “Microsoft Gaming” name in favor of Xbox, and adopting daily active players as the division’s new internal success metric.
The changes come as Xbox faces a sustained revenue slump. Gaming revenue totaled $5.3 billion in the most recent quarter, down from $5.7 billion a year earlier, and has declined in four of the past six quarters. Hardware revenue fell 33%.
Microsoft’s recent 10-Q filing also disclosed impairment charges in the gaming business, meaning the company has written down the value of some gaming assets, suggesting that parts of its gaming portfolio aren’t performing as expected.
Sharma described the decision to wind down Copilot on mobile and stop its development for consoles as part of a plan to “retire features that don’t align with where we’re headed.” Her post did not address the status of the Copilot beta on the Xbox PC app or the ROG Xbox Ally handheld.
The feature drew skepticism from the start. Gaming writer Thomas Wilde called it “a solution looking for a problem” in a March 2025 analysis on GeekWire, questioning whether players wanted an AI chatbot alongside their games.
More recently, Wilde raised additional concerns about the feature pulling guide content from the open internet without attribution, writing that Gaming Copilot was “eating its own seed corn” by undermining the ecosystem of online guides it depended on.
The feature’s full lifecycle, from announcement to cancellation, spanned roughly 14 months.
