Microsoft Dismisses Rumors of Xbox Chief Phil Spencer's Departure

Microsoft has dismissed speculation that Xbox head Phil Spencer plans to retire "anytime soon," as rumors about his future circulated following the company's major round of layoffs.

Approximately 9,000 employees, or 4% of Microsoft's workforce, were let go. While most cuts occurred outside the gaming division, Xbox studios were significantly impacted. Projects like Rare's Everwild and the Perfect Dark reboot were canceled, and The Initiative was shut down.

Significant layoffs also affected Candy Crush maker King and Bethesda's European offices. ZeniMax Online Studios saw its unannounced MMO canceled and its team reduced, with veteran studio head Matt Firor stepping down. Reports also indicate job cuts at Forza developer Turn 10 and several Call of Duty studios.

Amid the widespread cuts, Call of Duty insider @TheGhostOfHope claimed Spencer—who has faced criticism for repeated layoffs since Microsoft's $69 billion Activision Blizzard acquisition—would step down as CEO after the next Xbox launch, with current Xbox President Sarah Bond taking over.

Microsoft has since issued a statement pushing back on this timeline. Xbox communications head Kari Perez told The Verge, "Phil is not retiring anytime soon."

It's worth noting the phrasing is deliberately vague and doesn't directly refute the claim. "Anytime soon" is an undefined period—does it mean this year, next year, or 2027?

Microsoft reportedly aims to release its next-gen Xbox in 2027, though plans could shift. What is clear is that Spencer has overseen severe cutbacks since finalizing the Activision Blizzard deal. Microsoft laid off 1,900 employees in January 2024, followed by further cuts with the closure of Arkane Austin (Redfall) and Tango Gameworks (Hi-Fi Rush). In September 2024, an additional 650 gaming staff were cut, and in May of this year, Microsoft reduced its workforce by a staggering 6,000 people, or 3% of its total staff.

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In a June 2024 interview with IGN, Xbox head Phil Spencer stated, "I have to run a sustainable and growing business within the company, which sometimes forces me to make difficult decisions—choices I don't personally favor, but that need to be made."

So, what's next for Microsoft? All games featured during its June 2025 showcase are reportedly safe for now, along with their development studios. The company has announced a strong presence for gamescom in August, where it is expected to showcase its upcoming lineup.