Navigating the Turbulence: Microsoft’s Executive Exodus

It feels like not a week has gone by this year without a senior Microsoft executive leaving the company. Some departures have triggered sweeping shakeups of Microsoft’s biggest businesses, while others have seen fresh faces replace veteran employees. Executive departures at Microsoft are nothing new, but the pace feels notable this early in the year.

The timing points to a Microsoft that is struggling to retain talent in a market where competition is high and the stock price is low. Investors have been hammering Microsoft’s stock price in recent weeks, and at one point last month it had dropped by more than 30 percent compared to six months ago. High-demand employees don’t stick around when their compensation is lowering or they think a company is headed in the wrong direction.

The departures have impacted every part of Microsoft, including CoreAI, Windows, Office, and GitHub. With previously unreported changes at Amazon weighing on employees’ minds, and GitHub growing increasingly less independent, Microsoft is now changing up its annual rewards and performance programs to respond to the departures.

The wave of significant changes started in January, when Manik Gupta, former corporate vice president of Microsoft Teams, left the company. Microsoft hired Gupta in 2021, in a bid to lead a new consumer apps effort with Microsoft Teams consumer, Skype, and GroupMe. Microsoft has since shut down Skype in favor of Microsoft Teams, and GroupMe remains an excellent app that not enough people have even heard of.

I was surprised to see Gupta leave. His experience running various teams at Uber was supposed to help Microsoft build “world-class consumer experiences.” But trying to get consumers to care about Microsoft Teams post-pandemic was probably a tall ask, especially given Microsoft’s decade-long struggle to get consumers to use its products.

Just weeks after Gupta’s departure, Hayete Gallot returned to Microsoft to become executive vice president of security, reporting directly to CEO Satya Nadella. This pushed former security chief Charlie Bell out of the role, in a move that many employees inside the company view as a response to Microsoft’s struggles with security in recent years.

As the dust settled on the security changes at Microsoft we saw an even bigger departure. Former Microsoft Gaming CEO Phil Spencer announced he was retiring after nearly 40 years at the software giant. Spencer’s retirement wasn’t too surprising, but many considered former Xbox president Sarah Bond to be the heir apparent. Instead, Microsoft picked former CoreAI executive Asha Sharma to lead Xbox, leaving Bond to resign from the company. Sharma is now promising “the return of Xbox,” as Microsoft has come to the sudden realization that Xbox is the last relevant consumer brand it has left.

We haven’t seen a shakeup of the Xbox org just yet, but Lori Wright, former CVP of partners and business development at Xbox, announced her resignation shortly after the news of Spencer and Bond leaving. Microsoft veteran Kiki Wolfkill, former head of film and TV at Xbox, also announced her resignation from Microsoft this week. Wolfkill had spent 28 years at the company, and helped produce the Halo TV series with Paramount.

Another significant departure happened in March, when Rajesh Jha, former executive vice president of Microsoft’s experiences and devices group, announced he is retiring after more than 35 years at Microsoft. Jha had been overseeing Windows, Office, Microsoft 365 Copilot, and much more, and his departure triggered a flattening of Microsoft’s upper management. This has allowed the leaders of Windows, Office, and other products to report directly to Nadella. Much like Spencer, Jha’s retirement wasn’t too surprising given it had been rumored internally for months, but it was significant enough to trigger even more executive shuffling.

Microsoft appointed a new Copilot boss shortly after Jha’s retirement news, with Jacob Andreou now leading the Copilot experience across both consumer and commercial. Different teams had been leading the various parts of Copilot on the consumer and commercial sides for years, so this should hopefully lead to a more cohesive Copilot for businesses and consumers.

Microsoft AI CEO Mustafa Suleyman lost responsibility for consumer Copilot during this reshuffle, in a move that Microsoft is positioning as allowing him to focus on building the company’s own AI models. I think it’s more of an admission that consumer Copilot has failed to compete with Gemini and ChatGPT, and that Suleyman’s time would be better spent on competing with Anthropic and OpenAI, where it matters.

The executive shakeup at Microsoft continued last month with the departure of Lindsay-Rae McIntyre, former diversity chief at Microsoft, triggering HR changes as the company tries to chase AI demand. Then earlier this month, Julia Liuson, head of Microsoft’s developer division (DevDiv), announced she was resigning after 34 years at Microsoft. It’s not clear who is replacing Liuson, if anyone, and sources I’ve talked to at Microsoft are nervous about the inevitable organizational changes that are bound to happen in DevDiv and Microsoft’s broader CoreAI division after Liuson’s departure in June.

Coupled with these changes, Amazon — one of Microsoft’s biggest competitors — recently announced internal changes that turn its software developers into “Builders” that are expected to use AI agents daily. Software management roles at Amazon are now “Builders Leads,” who will help supervise AI agents and software developers. Microsoft employees I’ve spoken to fear that the company will introduce something similar to Amazon, in a bid to get even more software built by AI agents.