They just fired the experienced main people in charge of it and replaced them with people with little game industry expertise and Satya Nadella is an absolutely vapid person with strange ideas who has been making increasingly eccentric decisions/declarations about MS and Xbox. They have no clear plans for the future of Xbox, just a lot of woowoo about AI. They already basically flopped out of this generation. Plus the wild and unpredictable headwinds caused by AI memory chip and processor demand. They also fired a huge number of people across a large number of studios, big and small (in some cases deleting entire studios), which significantly decreases their ability to make games.
When this lack of a plan fails to produce record profits (which is what Nadella has been apparently demanding), I'd be very unsurprised if the continuing short-termism and AI-is-magic obsession among MS execs makes them decide to start selling off studios and IPs for short-term gains.