There were already rumors that Neil Gafter would leave Google and join Microsoft.

It's now official

"I work for Microsoft on the dotNet platform languages. To balance my life, my hobby is designing and developing the future of the Java programming language."

and on twitter

"working on Microsoft Visual Studio Managed Languages with Anders Hejlsberg, on C# and other languages."

The Java Posse seems to have an interview with Neal ( I haven't checked yet).

Neal had a great influence on the Java language and lead one of the Closure proposals.
Unfortunately Closures will probably not make it into Java 7.

This is really a bad day for Java. Microsoft's .NET is already moving quickly to support new interesting languages
whereas Java is falling behind. For example, a real LINQ for Java will not be possible without closures.
With Neal working on .NET/C# Microsoft will probably advance even further.