Xbox CEO Asha Sharma Admits The Business Is “Not Healthy,” Then Gets Hit With H-1B Backlash
Xbox CEO Asha Sharma told her own staff the division’s business is broken. In a memo posted to X on July 6, Sharma wrote that “our business today is not healthy” and that fixing it will require “painful” changes, starting with roughly 3,200 job cuts across Microsoft’s gaming division through fiscal year 2027. Half of those cuts hit immediately. Four studios left Xbox for new management the same day.
Sharma didn’t stop at “not healthy.” She told employees Xbox operates at margins three to ten times lower than comparable platform and publishing businesses, a gap she attributed to years of bets that failed to pay off. Chief among them: Xbox Game Pass, the subscription model Microsoft has leaned on for growth since 2017. In her own words, that bet “created meaningful value, but did not grow at the pace” the company expected. A multi-platform release strategy and a wave of studio acquisitions fared no better, according to her memo.
The layoffs land on top of what Sharma called the most severe hardware crisis in Xbox’s history, driven by a DRAM shortage tied to AI infrastructure demand that has pushed console component costs to multiples of their 2025 levels. Microsoft is on pace to spend more than $100 billion on AI and cloud infrastructure this fiscal year, with roughly two-thirds of that going to AI chips. Xbox’s own workforce is paying the price for a division Microsoft’s leadership admits it can’t run profitably, while the parent company pours record capital into unrelated AI spending.
That contrast is exactly what set off the backlash spreading across X. Critics have been circulating Microsoft’s H-1B visa filings alongside the layoff numbers, framing the story as Sharma cutting 3,200 American jobs while Microsoft simultaneously files for thousands of H-1B visas. Xbox employees have not been shy about their own view of her leadership either. One told The HR Digest, “We went from Phil Spencer, who actually loved games, to someone who treats Xbox like just another P&L to optimize.” Another comment aimed at her track record before Xbox put it more bluntly: “It feels like she’s here to downsize, collect her package and move on.”
Sharma closed her memo with a promise that Xbox will return to growth next year and that these changes serve “a bigger future for Xbox, not a smaller one.” The math she laid out in the same memo says the current one isn’t working. Microsoft shares closed at $373.02 on June 30, down 19% for the month and near a 52-week low.
Xbox has cut thousands of jobs, closed or spun off five studios, and lost a chunk of its own workforce’s trust in a single week. If the business Sharma inherited was already unhealthy, why is the fix landing on American employees first while the visa filings keep coming?
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