Update, April 7: After Microsoft began taking action against emulators being run on Xbox consoles, a statement shared on Twitter attributed to a member of the Xbox QA team suggested that the action was being taken due to "legal issues with Nintendo." Now, an official Microsoft statement suggests that's not the case.
"The information currently circulating on Twitter is not accurate," Microsoft tells IGN. "Our actions are based on a long standing policy on content distributed to the Store to ensure alignment with our Microsoft Store Polices [sic]. Per 10.13.10, Products that emulate a game system or game platform are not allowed on any device family."
Original story, April 6: Emulator developers are reporting that Microsoft has started to crack down on certain forms of emulator distribution on Xbox Series X and S consoles.
Microsoft's official store policies dictate that "products that emulate a game system or game platform are not allowed on any device family," yet players have been bypassing that restriction for some time. You can't find emulators on the actual Xbox store, but various options exist to allow you to install homebrew applications, including emulators ranging from Duckstation to Dolphin and Xenia, through third-party sources.
But Microsoft has now taken those options down. Emulators and other homebrew applications will now not launch on a standard Xbox console, as you'll get the message that "this game or app can't be launched as it violates the Microsoft Store Policy." The change was quickly noted on the Xbox Emulation Hub Discord.
There is a caveat to all this. Xbox consoles offer a dev mode option that lets you side-load whatever applications you want, including emulators. Dev mode is intended to be a simple way for game and app makers to turn their Xboxes into development and testing stations, and getting access to the mode costs $20. You also have to go through the (slight) hassle of swapping back to standard retail mode every time you want to play a non-emulated game.
Microsoft's obviously within its rights to restrict emulators on its platform - it is, again, right there in the store policy - but users are understandably frustrated with the sudden changes in how these policies are enforced. Members of the Xbox Emulation Hub Discord mentioned above are hoping to start a social media campaign in an effort to convince Microsoft to reverse the decision.
Last year, Microsoft also shut down a number of Xbox dev mode accounts without warning, a move many suspected had to do with emulation. The company quickly reversed those shut downs, saying that it had "no plans" to remove dev mode - though that statement never directly addressed the emulation question.
Well, at least there are other ways to play the best retro games of all time.