Microsoft is undergoing significant leadership changes within its gaming division. Phil Spencer, who led Xbox for nearly a decade and helped expand Microsoft's gaming business through acquisitions like Activision Blizzard, is retiring after 38 years at Microsoft. Spencer's departure follows a challenging period marked by a 10% decline in gaming revenue in the December quarter and increased competition from Sony and Nintendo. In his place, Asha Sharma, formerly president of product in Microsoft's AI division and an ex-Instacart executive, has been appointed as CEO of gaming, reporting directly to CEO Satya Nadella. Sharma's appointment aims to reinforce Microsoft's commitment to its core Xbox fans and developers, with plans to integrate Windows and Xbox more closely and innovate across devices like the Xbox Ally handheld. Meanwhile, Sarah Bond, president and COO of Xbox, is also leaving Microsoft, with her departure announced alongside Spencer's. Bond joined Microsoft in 2017 and played a key role in platform strategy, Game Pass expansion, and cloud gaming initiatives. Her exit marks a significant leadership shift as Microsoft navigates a period of strategic realignment, including avoiding layoffs despite studio closures and studio shutdowns, and emphasizing platform and content development. Microsoft emphasizes that these leadership changes do not involve layoffs or studio closures, although the company is facing increased pressures to innovate and compete in the gaming industry.