Here comes the Xbox AI

Microsoft’s first big Xbox AI feature is here, and it’s… a chatbot. The animated virtual assistant will handle online support queries, but sources familiar with Microsoft’s plans tell me it’s part of a larger effort inside the company to cautiously bring AI features to Xbox.

Microsoft CEO Satya Nadella has refocused the entire company on AI, but Xbox has been the clear exception when it comes to visible AI features. While the software giant has been using AI models to help moderate its Xbox platform for years, we haven’t seen Microsoft rush to integrate Copilot into the Xbox dashboard like it has with Windows and Office. I understand the hesitancy. The team is acutely aware of the negative perception of AI features from gamers and creatives, and Microsoft wants to get this right.

Alongside the Xbox chatbot, Microsoft is also planning to update its Xbox dashboard with AI-powered natural language search soon. This new search feature, which quietly appeared in an Xbox support article, will let you search for “puzzle games for kids” and get results that are relevant, instead of having to search for the exact game title. This updated search experience started rolling out recently and will be available widely in the coming weeks. It will also handle misspellings and acronyms, making it a lot easier to search for Xbox games you want to download and play.

Microsoft is still largely focused on the developer side of AI right now, but expect to see its focus turn to games eventually. Microsoft partnered with Inworld AI last year to develop Xbox tools that let developers create AI-powered characters, stories, and quests. It’s similar to the AI NPCs that both Nvidia and Ubisoft are working on, and we’re bound to see these start appearing in games soon.

Microsoft has been using AI to build games for nearly 20 years, with titles like Forza having Drivatar AI capabilities to learn from the driving behavior of actual players. But it has bigger ambitions for how AI will interact with Xbox games, with the company demonstrating recently how its Copilot assistant could help guide you through Minecraft in the future.

Microsoft’s latest AI efforts in gaming are being led by a team under Fatima Kardar, corporate vice president of gaming AI. Earlier this year, Haiyan Zhang, general manager of gaming AI, spoke at the SIGGRAPH conference about how AI will change the gaming industry. “Broad availability and accessibility of generative AI has really been a major step forward in the capabilities of the technology,” said Zhang in August. “As with any new technological change, how the future unfolds is up to all of us and our teams. We really do need to think about how to apply this in support of players and game creators.”

The gaming AI team is focused on the developer tools needed to enable generative AI inside Xbox games, but it’s also exploring how large language models could help developers summarize large documents and information while building games. Microsoft is positioning these tools as support for game developers, but the industry is wary of automation and job losses in a period when thousands of developers have been impacted by cutbacks.

Beyond Xbox tools and software features, there’s also the possibility of a future Xbox supercharged with AI. Microsoft teased an ultrapowerful next-generation Xbox console earlier this year, with Xbox president Sarah Bond promising “the largest technical leap you will have ever seen in a hardware generation.”

Part of that technical leap will involve AI. Sony’s PS5 Pro console goes on sale today with a new AI-powered PlayStation Spectral Super Resolution feature that’s essentially an upscaling technique similar to Nvidia’s DLSS. It improves frame rates and image quality for PlayStation games, and you can be sure Microsoft won’t want to fall behind Sony’s AI efforts when it’s ready to introduce the next Xbox console.

Zhang has some experience building innovative hardware, too. She spent most of her nearly 12-year Microsoft career in the UK working on a variety of research projects before heading to the Xbox team in Redmond, Washington, initially as chief of staff. One of the research projects Zhang worked on was Project Zanzibar, a smart play mat that blended the digital world with the physical. If you imagine Minecraft combined with Lego in a way that helps you play games, that’s what Project Zanzibar aimed to be in 2018, before large language models and generative AI were a thing. Zhang also worked on Project Emma in the UK, a life-changing biomedical device that helps with tremors caused by Parkinson’s disease. Zhang’s Microsoft research experience clearly made her a good fit for the experimental phase of bringing AI to Xbox games.

Kardar, meanwhile, has been at Microsoft for more than two decades and most recently was overseeing AI infrastructure on products including Bing and Bing Chat. With some Xbox AI features slowly appearing already, I’m expecting to see a lot more from this team throughout 2025.

I revealed last month that Xbox Cloud Gaming will let you stream your own games to phones, tablets, and TVs starting in November. Now, Microsoft has started testing this more broadly internally — which suggests it’s nearly ready for Xbox Insiders. Sources tell me the company has selected an initial list of games that Microsoft employees can now test on Xbox Cloud Gaming that aren’t part of the Game Pass library. There are 10 games in total:

These games are currently available in Microsoft’s internal Xbox Insider ring, and employees are being encouraged to submit feedback on the experience by referencing “Lapland” in feedback reports. Project Lapland is the codename for this long-running project to ready Microsoft’s xCloud servers to support streaming thousands of games. Microsoft now looks ready to test its new Xbox Cloud Gaming streaming capabilities with Xbox Insiders in November, before expanding them to more Xbox users and more games.

Thanks for subscribing and reading to the very end. I’m traveling next week, so Notepad might arrive on Friday instead of the usual Thursday slot. Either way, what do you want to see more or less of in Notepad? I’m all ears, and you can reach me via email at notepad@theverge.com.

If you’ve heard about any of Microsoft’s other secret projects, you can also speak to me confidentially on the Signal messaging app, where I’m tomwarren.01. I’m also tomwarren on Telegram, if you’d prefer to chat there.

Correction, November 7th: This story initially misstated the structure of Microsoft’s gaming AI organization. It is led by Kardar, not Zhang.