In 1996, FASA Interactive and Virtual World Entertainment, another company created by FASA Corp founders Jordan Weisman and L. Ross Babcock, became wholly owned subsidiaries of Virtual World Entertainment Group (VWEG). In 1999, Microsoft Corporation purchased VWEG to acquire the talent at FIT and the intellectual properties of FASA Corp. The VWE component of VWEG was sold to a group headed by VWEG's former CFO, James Garbarini. FASA Interactive then became a FASA Studio, a component of Microsoft Studios. As such, the company developed games exclusive to the Windows and Xbox platforms. Its headquarters were located in Redmond, Washington, only a few miles from Microsoft Corporation's main campus.
FASA was officially shutdown on September 12, 2007 with only the Community Manager and Technical Support Manager positions remaining active to support their games. Microsoft subsequently licensed the rights to produce electronic adaptations of FASA games back to Weisman, who is currently heading a venture called Smith & Tinker.