Xbox CEO Asha Sharma, roughly 100 days into her tenure, delivered a blunt assessment of Microsoft’s gaming business in a memo to employees Wednesday, saying that heavy spending with thin profit margins and declining revenue “cannot continue.”
The memo, posted publicly on the Xbox blog, came as Bloomberg News reported that the division is planning major job cuts next month, soon after the close of Microsoft’s fiscal year on June 30. Xbox is also planning significant cuts to marketing and other budgets, according to the report.
The exact scale of the layoffs is not yet clear. Microsoft declined to comment. The Verge also reported that Xbox “will be hit with significant layoffs next month,” citing people familiar with the plans.
Sharma’s memo did not mention layoffs but described a business that needs a sweeping reset. She and Xbox content chief Matt Booty, who co-signed the memo, cited rising hardware component costs, an overextended studio system, and aging platform infrastructure among the challenges facing the division.
Xbox will end the fiscal year at about a 3% “accountability margin,” an internal metric Microsoft uses to measure the profitability of the business, according to the memo.
“Excluding Activision Blizzard King, over the past five years, we have spent over $20 billion on ongoing investments in our content, platform, and hardware subsidy, but our annual revenue has declined nearly half a billion during that time,” Sharma and Booty wrote. “Going forward, this cannot continue.”
Microsoft’s most recent quarterly filing illustrates the challenge. Gaming revenue fell 7% to $5.3 billion in the quarter ended March 31, with Xbox hardware revenue down 33% on lower console sales, and Xbox content and services revenue down 5%.
The memo follows Sunday’s Xbox Games Showcase, where Sharma reversed course on the company’s multiplatform strategy, announcing that Gears of War: E-Day and Clockwork Revolution will be Xbox console exclusives. Bloomberg reported Wednesday that a PlayStation 5 version of the new Gears of War game had been in development, and was canceled, before the announcement.
Sharma took over in February from Phil Spencer, the longtime Xbox leader who announced his retirement after 38 years at Microsoft. A former Instacart COO and Meta product executive, she previously ran Microsoft’s CoreAI product organization.
Apple’s WWDC 2026 keynote is generating a lot of buzz about Safari’s new tab-organizing feature. Apple is calling it intelligent, powered by Apple Intelligence, and presenting it with the kind of slick animation and confident marketing that Apple does well. But the credit for the innovation doesn’t belong to Apple.
Microsoft Edge has had an AI-powered Organize Tabs feature for a while now. Back in February, I spent time testing it with 40+ tabs open across multiple topics, and came away genuinely impressed. Apple saw the same potential, built its own version, gave it a polished demo video, and now half the tech community thinks Cupertino just invented something new.
To be clear, Apple didn’t invent AI tab organization. Microsoft did. And the funny part is that Microsoft barely talked about it.
What is Microsoft Edge’s AI Organize Tabs feature?
Edge’s Organize Tabs feature uses AI to automatically group open tabs by topic, with color-coded Tab groups and names that the AI picks on its own. There is no Copilot branding here and zero intrusive prompts. You hit the Organize tabs icon from the Search tabs menu, and Edge does the work in under a second.
Before using Organize tabs vs After using Organize tabs
In my hands-on review of the feature, I threw 40 tabs at it, covering completely different topics, including an exclusive leak about the Lenovo ThinkPad X13 Detachable, the budget MacBook, Dell XPS 14, Samsung Unpacked, WhatsApp Resume from Android, Windows 11 26H1, and a couple of YouTube tabs mixed in for good measure. The AI sorted all of them into 8 properly named groups in under a second, including separating the Samsung Galaxy S26 Ultra from the main Samsung Unpacked group, which I genuinely did not expect.
I then ungrouped everything, shuffled the tabs around so similar topics weren’t next to each other, and ran Organize Tabs again. Same result. The AI didn’t need the tabs to be in order to figure out what they were about.
What I liked most was the customizability. After grouping, you can rename any group, change its color with a full color picker, move tabs between groups, or push an entire group to a new window. Chrome’s manual tab grouping looks barebones by comparison, because it is, as Chrome requires you to group every tab yourself.
In my review, I concluded that no other browser had this feature at the time. My conclusion aged well for about four months, and then Apple announced it at WWDC 2026.
Apple calls it ‘intelligent.’ Microsoft never called it anything.
At WWDC 2026, Apple announced that Safari can now automatically organize tabs into relevant topics using Apple Intelligence. The demo showed fluid animations, clean transitions, and the kind of presentation that Apple has always been exceptional at. The tech community, predictably, went gaga over it.
Apple’s Newsroom described it as: “Safari can now simplify multi-tab browsing by automatically organizing a user’s tabs into relevant topics.” If you replaced “Safari” with “Edge” in that sentence, it would have been accurate since February.
Microsoft, on the other hand, quietly launched the same capability and never really pushed it. There wasn’t any keynote or flashy demo. I haven’t seen any marketing for this in social media either. At the time, the feature page on Microsoft’s site showed generic Tab groups like “Cooking” and “Shopping”, which didn’t exactly sell what the AI was actually capable of. Edge’s AI gives you contextually specific names like “Lenovo ThinkPad Shopping” when you have shopping tabs for ThinkPad models open. Apple’s messaging is better, and its presentation is better. But the idea isn’t Apple’s.
Apple Safari tab organization feature powered by Apple Intelligence is not as powerful as Microsoft Edge’s version
Also, Apple’s tab organizing feature with “Apple Intelligence” is just an auto-tab organizing feature, and doesn’t have the finesse of Microsoft Edge’s version, which has color-coded tabs and better customizable naming, making it look like a more polished version, as it should be, since it was Microsoft’s idea in the first place.
And here is the uncomfortable position Microsoft now finds itself in. If Microsoft starts promoting Organize Tabs more aggressively now that Apple has put it in the spotlight, a large portion of people who discover it will assume Microsoft was inspired by Safari.
Not the first time Edge’s innovations have been absorbed by a competitor
Earlier this year, Google announced Vertical Tabs and Immersive Reader Mode for Chrome, and the tech press treated it like Google had just reinvented browsing. Microsoft Edge has had vertical tabs since 2021, and Immersive Reader has been in Edge since 2019. I’ve been using vertical tabs on Edge for over four years.
Microsoft Edge promotes vertical tabs again as Chrome finally adds the same feature
Two days after Google announced vertical tabs, the official Microsoft Edge account on X posted a poll asking users whether they prefer horizontal or vertical tabs. Microsoft was compelled to remind people that Edge already had a feature that Chrome had just announced as if it were brand new. Two days after. That’s where Edge’s market share has put them, which is reacting to Google’s announcements about Edge features.
Microsoft Edge’s X post about Vertical Tabs
Edge has only around 5 to 8% market share, while Chrome commands 60 to 70%. Even with vertical tabs for five years, the innovation wasn’t enough to shift the needle. Now the same story is repeating with Organize Tabs, just with Apple in Chrome’s position.
Ironically, at the same time Edge keeps losing unique features to competitors, it’s also losing its own identity. Microsoft has been removing icons from Edge’s right-click context menu, a change we noted when covering Edge’s design drift toward Chrome. Edge once had a distinct look and feel. Now, with Microsoft stripping out unique UI elements, it increasingly looks like a Chromium browser with a Copilot logo stamped on it.
What Microsoft should be doing instead
Apple announced two features at WWDC that are worth copying, and Microsoft should take note.
The first is Notify Me, which lets users ask Safari to monitor a web page for changes, such as a product restock or a price drop, and then sends a notification when it detects one.
The second is Describe an Extension, where you can describe what you want a Safari extension to do, and Apple Intelligence generates it for you. Building custom browser extensions has always required knowing JavaScript. A feature like this could open up browser customization to people who would never have written a line of code. It’s a clever use of AI in a browser context, and more useful than most things Microsoft has pushed under the Copilot banner.
Speaking of which, one of the more telling things about Edge’s Organize Tabs is that there is no Copilot logo anywhere near it. It works without invoking Copilot, without a sidebar popping up, without a chatbot. Microsoft spent years plastering Copilot branding onto every feature in Windows and Edge, and the result was widespread resentment of the name among its own users. The one genuinely good AI feature in Edge doesn’t use Copilot branding at all, which, in my opinion, is the right approach. But Microsoft buried it anyway.
Apple wins because Microsoft doesn’t show up
Apple is exceptional at making people feel like they just saw the future, even when the future arrived elsewhere a year earlier. The WWDC Safari demo with its smooth tab-grouping animation looked great. But the capability of AI grouping your open tabs into contextual topics was already in Edge, working well, and being used by almost nobody because Microsoft never made anyone care about it.
Google copied Immersive Reader. Apple copied Organize Tabs. At some point, the pattern stops being about competitors catching up and starts being about Microsoft not doing enough to hold its lead.
Edge is a good browser with some really useful features that most people never try because they never switch from Chrome in the first place. Until Microsoft figures out how to make people care about what Edge can do, it will keep watching its best ideas get picked up, polished by a competitor, and celebrated as innovation.
Bluesky will be getting "communities," which will function as smaller spaces where you can "go deeper and hang out with people who care about the same stuff" sometime this year, according to head of product Alex Benzer. They will be built on the decentralized AT Protocol that underpins Bluesky, with Benzer saying that "it's a new structure for everyone" that's part of the "Atmosphere" (a shorthand for the AT Protocol ecosystem).
Benzer listed out a "few ideas we have in mind so far" in a thread. "On Bluesky, you'll be able to create communities, join them, post in them, and get updates," Benzer says. "The core features on Bluesky stay simpl …
Microsoft says you’ll be able to run Windows 11’s local Language Model APIs on non-Copilot+ PCs as long as you meet the new hardware requirement: an RTX 30+ GPU with 6GB of VRAM. It’s a major change, as it means Copilot+ PCs’ advantages are getting “thin,” and I wouldn’t be surprised if Microsoft drops the NPU requirement entirely in the future.
Copilot+ PCs officially debuted on June 18, 2024, and they’ve been driving sales for PC makers. However, it’s not because of the “Copilot” or “NPU” factor. It’s largely because newer PCs are now sold as “Copilot+ PCs,” so even a regular laptop purchase gets counted as proof that AI PCs are taking off.
For a PC to meet the “Copilot+ PC” requirement, it would need to have 16GB of RAM, an SSD, and at least a 40 TOPS NPU. For those unaware, an NPU (Neural Processing Unit) is a chip designed to run AI models, specializing in efficiency rather than raw power. On the other hand, a GPU is a heavy-duty processor designed for massive parallel tasks.
What is a “Copilot+ PC?”
Microsoft sold you Copilot+ PCs as the only way to run local AI, but that was never due to the design. A GPU can always run an AI model far better than an NPU due to its raw power, but Microsoft didn’t want Copilot+ PCs to appear less appealing, so it restricted local AI capabilities like Windows Recall and Click to Do to PCs with NPUs.
This means perfectly capable GPU-based PCs do not support Windows 11’s native local AI features, such as text-to-image, text generation, image generation, Windows Recall, and other capabilities, but that could change soon.
In a post on GitHub, first spotted by Windows Latest, Microsoft has quietly confirmed that Copilot+ PCs are losing one of their biggest advantages, as local AI is coming to RTX GPUs, as long as you meet the two requirements:
Own an RTX 30+ GPU
Have a supported GPU with 6GB of VRAM
According to the updated docs, if you’re a developer, you can now run local Language Model APIs on non-Copilot+ PCs by leveraging the GPU.
“Language Model APIs on GPU [Experimental]. The Language Model APIs now run on non-Copilot+ PCs equipped with a supported GPU, bringing local language model capabilities to a broader range of Windows 11 devices,” Microsoft noted. “Supported hardware includes NVIDIA GeForce RTX 30 series and newer with 6+ GB VRAM.”
This effectively broadens the range of Windows 11 devices capable of running local language models beyond just the new Copilot+ PCs equipped with NPUs.
Of course, a language model API isn’t something you can normally run on your PC unless you know how to build apps and call the API, but it’s actually the beginning of the end of Copilot+ PC-exclusive features.
What are the potential new AI features coming to all PCs with GPUs via Language Model APIs?
I looked up Microsoft’s official documentation to understand how unlocking this API for all PCs with capable GPUs would change the AI integration in Windows, and I found some interesting details.
Language Model APIs allow Windows apps to access AI features directly on your PC, and these APIs are powered by a small language model called “Phi Silica.” We previously spotted references to Phi Silica in Microsoft Edge for Windows for features like “Rewrite using AI.”
Windows PCs do not have AI models by default unless you buy a Copilot+ PC, so that means if you run a new app that uses Local Model APIs, it can call on Windows Update to download the Phi Silica model on your PC and run it locally using the GPU, if supported. Right now, an app can tap into the following Windows AI features:
AI-powered text formatting in apps using Windows.AI.Text APIs
Summarize (TextSummarizer)
Rewrite (TextRewriter)
Text-to-Table (TextToTableConverter)
General prompt generation.
In other words, you’ll be able to use some ChatGPT-like features natively in Windows apps on Nvidia PCs, and everything will run locally, which means your privacy is fully protected compared to cloud models like Copilot or ChatGPT.
At the moment, it doesn’t look like Microsoft plans to bring Windows Recall, Click to Do, and AI in MS Paint to PCs without an NPU chip. Right now, the extended local AI capabilities are restricted to a single API, which mostly powers text and general prompt-related capabilities.
Typing a fewletters and numbers into my web browser, I find myself gaping at the identity documents of complete strangers. The passport of a young woman from Germany. The passport of a man from Spain with glasses resting on his head. The front and back of another man's driver's license, a stereotypically goofy expression on his face.
They were all sitting unprotected at public URLs, with no password or access control of any sort. If I sent you a link, you could have looked at someone's passport.
"We have to do something about it as fast as possible, because people will find this and resell it. It will do damage," Sammy Azdoufal told me i …
Microsoft's Xbox division will be hit with significant layoffs next month, according to people familiar with Microsoft's plans.
The company has been preparing for the layoffs internally for weeks, with Xbox CEO Asha Sharma hinting about "making hard choices" last month. Sources suggest the cuts could even involve a studio closure, or changes to the Xbox studio lineup. In a recent Giant Bomb episode, rumors of 1,000 layoffs for Microsoft's Xbox division were mentioned. Bloomberg also reported today that the cuts would be "major," and involve budget cuts for marketing and other areas of Microsoft's Xbox business.
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