Xbox chief joins Fed AI jobs panel after layoff plan

Xbox CEO Asha Sharma is joining a Federal Reserve task force on artificial intelligence and jobs just after announcing deep cuts at Xbox. For investors tracking big tech, the timing puts two major themes in the same frame: companies are spending heavily on AI while also rethinking headcount and margins.

The Federal Reserve said Thursday that Sharma will serve on its Productivity and Jobs task force, a group set up to study how AI and other broad-use technologies could affect the economy. Monetary policy, the Fed’s use of interest rates and other tools to influence inflation and employment, depends heavily on how officials read productivity, wages and labor demand.

Sharma previously worked in Microsoft’s Core AI group before taking over Xbox, according to the Fed announcement. She joins Marc Andreessen, co-founder and general partner at Andreessen Horowitz, and Charles I. Jones, a Stanford University economics professor who is currently on leave at Anthropic.

What the Fed is studying

The Productivity and Jobs group is one of five task forces the Fed said will bring in outside specialists from economics, business and central banking. The central bank said the groups will review parts of its approach to monetary policy, including how it studies productivity, jobs, inflation frameworks, economic data, communications and balance sheet policy.

Productivity means how much output workers or businesses produce with a given amount of time, labor and capital. If AI helps companies produce more with fewer resources, it could affect profits, hiring, wages and inflation. If the technology displaces workers faster than new roles appear, it could also change how policymakers interpret job-market data.

Federal Reserve Chairman Kevin Warsh said the economy has shifted sharply over the past generation and that the task forces will assess whether the Fed’s tools and policy methods can be improved.

“The U.S. economy has changed significantly over the last generation, and never more so than right now,” Warsh said. “Each task force will carefully consider whether policymakers' means and methods, analytical tools and policy approaches can be improved upon.”

Xbox cuts frame the labor question

Sharma’s appointment follows her letter to Xbox employees earlier in the week, where she described the plan as the “most significant restructure in Xbox history.” According to that letter, Xbox plans to reduce its workforce by about 3,200 employees through FY27, beginning with 1,600 role eliminations. Four studios will also leave Xbox for new management.

In the letter, Sharma said Xbox’s business was “not healthy.” She pointed to weaker margins than comparable platform and publishing businesses, a smaller Gen 9 console install base and rising costs.

Sharma wrote that Xbox’s investments in Game Pass, multi-platform releases and a wider content portfolio had created value, but had not expanded as quickly as expected. She said the division added teams and investment as its core business weakened.

“I know this is painful. These changes will directly affect people who have poured their creativity into building XBOX,” Sharma wrote. She added that the decisions did not reflect the affected workers’ talent or dedication.

The appointment also comes as other tech companies are pairing AI investment with workforce reductions. Decrypt reported that Snap cut roughly 1,000 jobs, about 16% of its staff, while focusing more on AI-powered tools. Decrypt also reported that Meta said it would reduce headcount by 10%, or about 8,000 jobs, as CEO Mark Zuckerberg pushed the company further into artificial intelligence.

This story draws on original reporting from Decrypt.