"The details mentioned in the article are ​inaccurate," indicated an Oracle following a Business Insider report claiming that it severed its ties with Microsoft despite citing people familiar with the matter: "Microsoft ⁠is both an OCI partner and a customer. We have a tremendously collaborative and fruitful partnership, where we ⁠often ​talk about ways we can expand ​upon our ongoing work together."

The report claimed that the cloud deal between Oracle and Microsoft was under pressure due to security and compliance concerns, leading to its collapse (via Reuters). According to the dismissed report, the massive cloud deal was worth a whopping $3 billion, arguably one of the largest cloud infrastructure leasing deals.

According to the outlet: "The plan was to move some Microsoft workloads to Oracle Cloud Infrastructure, but Oracle's public cloud did not have the Federal Risk and Authorization Management Program (FedRAMP), a standardized security framework that ensures cloud services are secure enough to handle U.S. government data. Oracle was not willing to add this framework, one of the people said."

Microsoft reportedly planned to leverage its cloud partnership with Oracle to access additional computing power, enabling it to meet growing customer demand and support AI training and inferencing. As it happens, shareholders recently filed a class action lawsuit against Microsoft, accusing the company of hiding cloud weakness while pouring billions into AI infrastructure.

They added that the tech giant fueled investor enthusiasm by portraying a rock-solid partnership with OpenAI, despite its current fragmentation, alongside a strong Copilot rollout. Elsewhere, Microsoft has reportedly turned to its cloud rival, Amazon, for extra computing power following rampant AI‑driven GitHub outages. The stakes in these AI deals seem to keep growing, almost endlessly.

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Microsoft's multi-billion-dollar bet on generative AI isn't paying off as the company expected. Well, at least in the short term. In a not-so-surprising turn of events, shareholders recently sued the software giant, citing that it defrauded them by intentionally overhyping AI (via Reuters).

They further alleged that Microsoft failed to disclose a slump in cloud revenue while continuing to invest billions of dollars in building out AI infrastructure without tangible returns. The complaint was filed in federal court in Seattle by the Michigan-based City of St. Clair Shores Police and Fire Retirement System.

Per the class action lawsuit, Microsoft shareholders alleged that the company fueled investor enthusiasm by portraying a rock-solid partnership with OpenAI, despite its current fragmentation, alongside a strong Copilot rollout. They further contended that the tech giant failed to adequately disclose or downplayed the scale of resources, particularly the substantial financial commitments required to build data centers essential for developing advanced AI models.

However, Microsoft dismissed the shareholders' claims as being without merit. "Microsoft stands by the integrity of its public statements and will vigorously defend itself in ​court,” it added.

In case you missed it, Microsoft’s stock fell 25% in Q1 FY26, putting the company on track for its steepest quarterly loss since the 27% drop in late 2008. But it isn't budging. Microsoft is doubling down on AI, with plans to invest about $146 billion in infrastructure in 2026, which is approximately twice last year’s $88 billion.

Market analysts and experts warned that Microsoft could be facing its worst quarter since the 2008 financial crisis if it continues blowing money on AI that isn't meeting investor expectations for returns.

For Q2 FY25, Microsoft's earnings report revealed 39% revenue growth in its Azure and cloud business, meeting analyst forecasts but down from 40% in the prior quarter, and projected 37% to 38% growth in the first three months of 2026.

It's also worth noting that the company reported $37.5 billion of capital spending in its second quarter, up approximately 66% from a year earlier and above the $34.3 billion projection by analysts.

Elsewhere, Axel Rietschin, a former engineer on Azure Core Compute who worked at Microsoft for a year, and as a Windows Base Kernel engineer for almost a decade, revealed that the company rushed the product to the market to compete with Google and Amazon. Consequently, it led to a talent exodus and lackluster software. AI hype left Microsoft’s cloud fragile and struggling to compete.

There has been concern, especially among residents, about the construction of data centers in their localities, which seemingly prompted Microsoft's "Community-First" AI infrastructure approach, which addresses some of the issues raised by communities themselves, including reducing its water consumption and promising not to increase electricity bills.

More recently, Microsoft CEO Satya Nadella revealed that the company is developing a new cooling technology dubbed full immersion, which will address the high demand for water by data centers. As such, data centers will now need as little water for cooling as "what a single restaurant would use."

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Over the past few years, Tesla CEO and billionaire Elon Musk has dragged OpenAI and CEO Sam Altman to court, citing involvement in racketeering and a fake humanitarian mission.

As you may know, the Musk v. Altman trial is still ongoing in court, where the billionaire claims he was defrauded out of billions of dollars that he invested in OpenAI. He claims that the company abandoned its founding mission after it transitioned from a non-profit business structure to a combination of a non-profit and for-profit arm, shortly after he departed.

More recently, court documents shed further light on the early days when Microsoft CEO Satya Nadella and OpenAI CEO Sam Altman were discussing forming their multi-billion-dollar partnership. Interestingly, high-profile Microsoft executives seemed to be a bit skeptical about investing in OpenAI, expressing fears that the AI startup could "storm off to Amazon" and potentially "shit-talk" Microsoft (via The Verge).

For context, OpenAI was mainly focused on developing AI-powered gaming bots, which seemingly caught the eye of Microsoft CEO Satya Nadella when the company's bot managed to beat a Dota 2 professional. Nadella sent Altman a congratulatory email, which he (Altman) seized as an opportunity to propose an even bigger partnership between OpenAI and Microsoft.

However, OpenAI needed much more computing power to scale its Dota 2 project, which was significantly more than the Azure credits it was receiving from Microsoft at the time. “Probably something like $300 million at Azure list prices,” Altman indicated.

This ended up spooking some of the top executives at Microsoft. “For those numbers to make sense, we’d have to be generating significant incremental revenue directly due to the deal ($500 million+) that couldn’t be gained in a more efficient way,” indicated Jason Zander, who was Microsoft’s Azure chief at the time, in an August 2017 email to Nadella.

Later on, Sam Altman circled back with an alternative proposal to “create a partnership with Xbox around gaming, and an open offer to share their technology and IP in exchange for expanded sponsorship for their Dota research,” as highlighted by Brett Tanzer, Microsoft's VP of Azure solutions and ecosystem.

While Microsoft's Xbox division was open to exploring new collaboration opportunities, committing to the research cost was an uphill task. Microsoft CTO Kevin Scott admitted to Satya Nadella that he wasn't sure what the company would get out of the deal if it agreed to give OpenAI more Azure credits for its research. At the same time, he was concerned about OpenAI moving to Amazon for support.

A year later, in 2019, Kevin Scott admitted to Microsoft co‑founder Bill Gates and CEO Satya Nadella that he had been "highly dismissive" of AI efforts at OpenAI and Google DeepMind, when the companies were busy competing to see who "could achieve the most impressive game‑playing stunt."

Scott became more interested in the AI game when OpenAI shifted to natural language processing models like ChatGPT, which signaled that Microsoft would shift behind Google's AI efforts, leading to Microsoft's making its first $1 billion investment in OpenAI, even though Bill Gates was against the idea and viewed it as a waste.

In 2026, a separate report emerged suggesting that Microsoft was considering suing OpenAI over a $50 billion deal with Amazon, alleging that it violates a critical clause granting Microsoft exclusive rights as OpenAI’s cloud provider through Azure.

So, Microsoft's multi-billion-dollar partnership with OpenAI continues to be fragmented. Recently, the ChatGPT maker ended its exclusive partnership with Microsoft, meaning Microsoft will no longer need to pay a revenue share to OpenAI. How much more fragmented could all this possibly get?

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Microsoft has shared an impressive earnings report for the financial quarter ending March 31, 2026. Despite Windows OEM, Devices, and Xbox content revenue declining, overall revenue still rose 18%. Microsoft Cloud revenue grew 29% to $54.5 billion, which helped drive the company’s results.

Here are the highlights from Microsoft’s FY26 Q3:

• Microsoft made $82.9 billion in revenue, up 18% from last year (15% once you adjust for currency).
• Operating income hit $38.4 billion, a 20% increase (16% in constant currency).
• Net income was $31.8 billion, rising 23% under standard accounting. Excluding one‑off items, profit rose 20% (18% in constant currency).
• Earnings per share were $4.27, up 23% on a GAAP basis. On an adjusted basis, EPS grew 21% (18% in constant currency).
• The non‑GAAP numbers remove the financial impact of Microsoft’s OpenAI investments to show underlying performance.

Microsoft mostly beat expectations across the board. But investors are now focused less on the results and more on whether Microsoft’s massive AI spending can keep delivering returns.

Thomas Monteiro, senior analyst at Investing.com, explained why the market is looking past the headline numbers:

"Despite an excellent quarter across all financial metrics, Microsoft has not been able to fully reset the AI capex narrative. While the economics across several key initiatives arguably look much better than last quarter — supported by healthy margin expansion, stronger efficiency, and resilient cloud and AI demand — the capex curve still looks enormous. This has left investors focused on whether the company is spending from a position of strength or playing catch-up in the AI infrastructure race."

In short, investors aren’t specifically questioning demand, but they are questioning the cost of supporting it.

Investors want to know whether all this AI investment will turn into lasting profit, not just faster growth.

"The release answered the near-term execution question, but not the longer-term capital intensity question," said Monteiro.

Microsoft has made massive investments in AI infrastructure, and those bills eventually come due. Demand across the industry is high, but as Monteiro notes, that’s not the debate anymore:

"Still, the market is treating those positives as necessary rather than sufficient, because the next phase of the debate is about returns on infrastructure spending, not demand alone."

Billions of dollars are being spent on AI across the industry. Companies need to find a path to profitability in the long term. We've seen OpenAI struggle to do so.

Microsoft's situation is different from OpenAI's, but there are still hurdles to overcome.

"The key issue is that Microsoft’s AI story is now too large to be judged only by growth rates. Investors want to see how quickly that growth converts into durable margin dollars, especially as infrastructure commitments keep moving higher," argued Monteiro.

Microsoft delivered a strong quarter that beat expectations. What it hasn't delivered yet is proof that its massive AI spending can turn into durable profit, and until it does, the market will keep asking the same question: how long will it be until this investment becomes worth it to the bottom line?

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A London-based tribunal recently ruled that Microsoft must face a class-action lawsuit alleging the tech giant has set the wholesale pricing for its Windows Server software on competing cloud platforms at higher rates than on its own Azure service.

Competition lawyer Maria Luisa Stasi initiated the lawsuit on behalf of approximately 60,000 UK businesses, seeking damages of roughly $2.8 billion. Microsoft's apparent setting of higher wholesale prices for Windows Server is an anti-competitive business practice. What's more, the extra cost is passed on to the customers who choose to access the product from rival cloud platforms.

Ultimately, this decidedly makes Azure more appealing to customers. The software giant indicated that the lawsuit doesn't provide a workable method for calculating the indicated damages, prompting it to ask the court to have the case thrown out. However, London's Competition Appeal Tribunal dismissed Microsoft's plea and indicated that the case is proceeding to trial (via Reuters).

Speaking to Reuters, a Microsoft spokesperson indicated that: "We also dispute the underlying allegations by the ‌class ⁠representative (Stasi), and today's decision makes no final determination on those claims."

They continued, "The cloud market ​has never been so dynamic and competitive".

That said, Stasi argues that the tribunal's ruling to allow the lawsuit to proceed to trial was "an important moment for the thousands of organisations impacted by Microsoft's conduct".

Interestingly, Microsoft has previously argued that using Windows Server as an input for Azure while simultaneously licensing it to rivals could be beneficial for competition in the grand scheme of things. Last month, the United Kingdom's Competition and Markets Authority (CMA) indicated that it was relaunching its investigation into Microsoft's corporate software services, including Windows, Word, Excel, Teams, and Copilot.

The CMA hopes to address any concerns around Microsoft’s licensing practices in cloud and facilitate a level playing field for AI, as the technology gains broad adoption across organizations.

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"Redmond is in a pickle," said Ben Reitzes, an analyst at Melius Research, following Microsoft's closing of its worst quarter since the 2008 financial crisis, which translates to approximately a quarter of its market value. However, the tech giant isn't giving up on its AI ambitions, as it plans to invest $146 billion in infrastructure in 2026. That's almost twice as much as it spent last year amid investor concerns about the profitability of the ever-evolving landscape.

Azure is arguably Microsoft's largest revenue driver, contributing billions annually by providing infrastructure, software services, and more to businesses worldwide through subscription-based cloud services, enterprise contracts, and consumption-based pricing models.

However, the platform has hit a couple of roadblocks over the past couple of years. Axel Rietschin, a former engineer on Azure Core Compute who worked at the company for a year and as a Windows Base Kernel engineer for eight years before that, has provided a chronological account, detailing how Microsoft rushed Azure to the market to compete with Amazon Web Services (AWS) in 2008 in a series of six essays (via The Register).

According to Rietschin, Microsoft's decision to rush Azure's launch, a mass talent exodus post-launch, a lack of software quality and testing discipline, a lack of architectural vision, and poor execution have all contributed to the challenges riddling the cloud service. What's more, the tech giant overlooked opportunities for stability and failed to support its staff, as its main focus was getting the service to market.

"This foundational fragility, rooted in rushed decisions and wishful thinking about how fast the platform could grow and stabilize, led to small but ongoing disruptions," indicated Rietschin. "Over time, those disruptions built up."

As a result, we've seen the government raise concerns, citing its dissatisfaction with Microsoft's Azure services. I'd also argue that this was one of the pain points that pushed Microsoft's multi-billion-dollar partnership with OpenAI into a new definitive agreement, consequently costing it its right of first refusal to be OpenAI’s compute provider.

Rietschin says OpenAI’s $11.9B deal with CoreWeave was a snub and a vote of no confidence in Microsoft's Azure services. In 2024, federal cybersecurity evaluators reportedly dismissed Microsoft 365 Government Community Cloud High (GCC High), branding it as garbage.

During Microsoft's financial results for FY26 Q2, the company revealed that it is facing immense capacity constraints, which have primarily contributed to a backlog in commercial bookings. It further indicated that OpenAI accounts for approximately 45% of the highlighted commitments.

Can AI really replace software engineers?

"One can reasonably infer that Microsoft struggled to meet OpenAI's demanding requirements on time and at scale," Rietschin added. Interestingly, the engineer suggested that these woes contributed to the layoff of 15,000 people at Microsoft last year.

However, he argues that laying people off isn't the solution. While speaking to The Register, the engineer indicated that "Microsoft executives should focus on bringing back senior technical leaders to improve dev training at all levels. Investing in people through mentoring and coaching by long-term Microsoft software engineers would have the broadest long-term impact. I think their most significant challenge was knowledge dilution caused by high attrition."

While Microsoft co-founder Bill Gates indicated that AI will replace humans in most tasks, he argued that software engineers would survive the revolution because the field is too complex to fully automate with the technology.

But as is the trend in most organizations right now, more professionals are now being replaced using AI, and it's beyond mere repetitive and redundant tasks. But the risks of having AI write code without proper human intervention or oversight are dire.

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The United Kingdom's Competition and Markets Authority (CMA) recently concluded, after a three-year investigation, that neither Microsoft's Azure nor Amazon's Web Services should be designated as having dominant status in the cloud market under the Digital Markets, Competition and Consumers Act (DMCC).

However, the CMA announced it's launching a new Strategic Market Status (SMS) investigation into Microsoft’s corporate software services, including Windows, Word, Excel, Teams, and Copilot (via Neowin).

The watchdog's investigation into Microsoft's software business is expected to start in May. According to CMA CEO Sarah Cardell: "An SMS designation would enable us to tackle remaining concerns around Microsoft’s licensing practices in cloud and would also enable us to ensure a level playing field as AI is rapidly embedded into everyday business software tools."

"Through this package of actions, we’re driving changes across cloud and business software to make sure these markets are competitive and resilient for UK businesses and the public sector."

The software giant has indicated that it's working to address the issues identified by the watchdog “quickly and constructively.”

With the SMS investigation expected to start in May, the CMA will now be able to take action on Microsoft’s use of software licensing to reduce competition in the cloud. Additionally, it would allow the UK watchdog to create a level playing field for competitors in the AI landscape.

The CMA says generative and agentic AI could transform the software industry, but warns the market could close unless Microsoft opens its ecosystem to third‑party AI developers.

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Xbox development is now so much faster that it is becoming difficult for developers to justify skipping the platform. With new tools that help studios scale their games across multiple platforms, Xbox and PC are increasingly positioned as a strong starting point for development.

For context, only two years ago, the process of getting set up to develop for Xbox took around 30 days. Before that, it could take several months.

Microsoft says developers can get to a working Xbox development environment in about 30 minutes.

How Microsoft drastically reduced Xbox development setup time

In the past, part of the Xbox development process was slowed down by paperwork. Becoming an Xbox partner meant waiting for contracts to be generated, sent, and processed.

That has now changed. Xbox partner agreements are generated automatically, cutting handling time by more than 90%.

Microsoft has also made Xbox development documentation fully public, which means developers no longer need to become a partner just to read how the platform works.

The Xbox GDK is also publicly accessible. Developers can install it with a single command using the Windows package manager.

Xbox games now build as standard x64 projects, like PC, which means the process is far closer to regular PC development than it used to be.

To help developers get started, Microsoft now provides more than 100 open source examples showing how to integrate Xbox features into a game.

What is Foundation Mode?

Foundation Mode is a new PlayFab offering announced at GDC 2026, giving Xbox developers access to core PlayFab services. Now, if, like me, you are not a developer and have no idea what any of that means, I did do some research so I can explain it.

PlayFab is a backend services platform that provides the infrastructure many modern games rely on. Think multiplayer lobbies, matchmaking, leaderboards, and similar systems.

PlayFab is owned by Microsoft and runs on Azure, its cloud infrastructure.

Until now, PlayFab has been a paid service. Those costs could stack up quickly, which could be difficult for developers of all sizes.

Microsoft has now changed that with Foundation Mode. The service is now free for developers shipping games on Xbox, providing tools like matchmaking, multiplayer lobbies, networking, cross saves, leaderboards, and more.

These services cover several areas developers usually have to build themselves, including player identity, progression, multiplayer systems, community features, live service management, economies, and gameplay data.

Developers can also start using these tools as soon as they commit to shipping a game on Xbox, with no Azure subscription or payment setup required.

Even better, the systems are cross-platform. That means developers can use the same backend services for players across iOS, Android, Nintendo Switch, PC, and PlayStation.

🗨️ Is this enough to convince developers not to skip Xbox or does more work need to be done?

Xbox is clearly lowering the barrier to entry here, but is it enough? I think it is getting close, though I would still like to see that 30% platform cut reduced to around 20% to make it even more competitive.

Let me know your thoughts in the comments and make sure you take part in our poll below:

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Microsoft's cloud storage and AI products are relied on heavily by U.S. Immigration and Customs Enforcement (ICE), according to reporting by +972 Magazine, Local Call, and The Guardian. Those outlets obtained files detailing the agency's reliance on Microsoft services and how usage has trended upward.

Between July 2025 and January 2026, ICE reportedly tripled the amount of data held on Microsoft servers. 400 terabytes of data were said to be stored last July. Almost 1,400 terabytes of data are now reportedly stored by ICE on Microsoft servers.

ICE uses a wide range of surveillance tools, including facial recognition, phone trackers, drones, and spyware.

The documents obtained do not list what types of information are stored on the servers. They do, however, indicate ICE uses both Azure and Microsoft AI tools.

While the documents do not indicate if ICE's data is stored on Azure, +972 states the documents show "ICE is using Microsoft’s AI video analysis tools including Azure AI Video Indexer and Azure Vision, which enable customers to analyze images, read text, and detect certain words, faces, emotions, and objects in audio and video files."

ICE has also reportedly increased its usage of Amazon cloud computing between July 2025 and January 2026.

Microsoft has faced scrutiny in the past for how its Azure services were used. Following months of protests, including several at major Microsoft events and on Microsoft campus, the tech giant moved to block the Israel Ministry of Defense (IMOD) from using some cloud AI and Azure services.

That shift came after a report from The Guardian claimed that the Israeli government used Microsoft services to store data and recordings and calls from Palestinians. Microsoft admitted that elements of The Guardian's report were accurate.

"We therefore have informed IMOD of Microsoft’s decision to cease and disable specified IMOD subscriptions and their services, including their use of specific cloud storage and AI services and technologies," said Microsoft President Brad Smith in September 2025.

While the situation regarding IMOD is separate from the recent report related to ICE, there is a noteworthy connection.

When speaking of the IMOD situation, Smith said (emphasis added), "We do not provide technology to facilitate mass surveillance of civilians. We have applied this principle in every country around the world, and we have insisted on it repeatedly for more than two decades."

Since the United States is part of the world, the natural inference would be that Microsoft's policies apply to U.S. federal agencies. The Guardian asked if that was the case. A Microsoft spokesperson stated:

“Microsoft does not comment on the operational use of our technology by specific customers. What we can say is that our approach is consistent globally: We prohibit the use of our technology for mass surveillance of civilian populations, require compliance with law and contract, and use internal review mechanisms to assess and address higher‑risk scenarios.”

Reports claim that several Microsoft employees have raised concerns regarding ICE's use of Microsoft technology. A reported response to Microsoft sources in December 2025 stated that the company did not have current contracts that “support immigration enforcement.”

The tech giant later confirmed in the following month that it has contracts with ICE and DHS (Department of Homeland Security) but that it “does not presently maintain AI services contracts tied specifically to enforcement activities.”

When asked about its contracts with ICE and DHS, a Microsoft spokesperson reiterated to +972, Local Call, and The Guardian that "Microsoft policies and terms of service do not allow our technology to be used for the mass surveillance of civilians," and added that Microsoft "[does] not believe ICE is engaged in such activity."

We'd like to hear your thoughts

Should Microsoft restrict access to its Azure and AI services? If so, what limits should be put in place?

Join the discussion in the comments.

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Microsoft and other hyperscalers are set for a big windfall if this new report is true.

One of the biggest constraints facing Big Tech right now revolves almost entirely around U.S. economic policy. The Trump administration's often arbitrary application of tariffs on foreign goods has wrought havoc across various industries, pushing up prices for U.S. consumers while wiping out hundreds of thousands of jobs. Amazon alone is cutting 16,000 positions as of January, and Microsoft laid off over 10,000 throughout last year.

"Line must go up" mentality has forced firms to cut costs in and push up its prices to offset margin pressure from tariffs, which act as tax on imported goods into the United States. For Microsoft, that means higher costs on various consumer goods, including Windows PCs, Surface devices, and Xbox consoles. Even products exempted from the tariffs directly may see added costs by virtue of their supply chains also seeing added costs. Firms pass on losses to consumers in the form of higher prices. For Microsoft, consumer devices are only a small part of its problem.

The biggest pressure point for Microsoft and other hyperscalers like Amazon and Google revolves around cloud and AI-first data centers. Building out compute for artificial intelligence platforms is becoming so expensive that it has investors spooked. Microsoft and Amazon both have seen hundreds of billions in market capitalization wiped out over capital expenditure concerns.

A new report in Financial Times suggests that relief may be on the way.

Citing sources familiar with the matter, albeit unauthorized to speak officially, FT says that the U.S. administration is allowing TSMC to provide exemptions to specific companies from an updated tariff regime. The White House is trying to incentivize TSMC and other chip makers to invest in U.S. manufacturing instead, to which Taiwan-based TSMC has pledged $165 billion in future investments.

The tariff carve-outs would reportedly be tied to how Taiwan allocates investments in building out U.S.-based chip manufacturing operations, although the source says the plans are still in "flux."

RELATED: Beat tariffs with these massive laptop deals

Microsoft is using TSMC to build its home-grown Maia 100, Maia 200 and Cobalt 100 AI data center chips, it also indirectly partners with TSMC for most of its other silicon needs. Microsoft and ASUS' Xbox Ally gaming handheld uses AMD's Z2 chipset, largely fabricated via TSMC. The next-gen Xbox SoC, codenamed Magnus by AMD, is also most likely being produced by TSMC. White House officials and TSMC both declined to comment.

While the report might be hopeful news for investors, it could also have positive impacts on consumers down the line. The TSMC-dependant Xbox Series X|S saw price increases last year as a direct result of U.S. tariff impacts. The move might signal at least partial acknowledgement of the negative impact on pricing — as mid-term elections loom.

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OpenAI is on the hook for hundreds of billions of dollars, but profitability today seems like a total fantasy. How can it survive? More investment, of course.

Following reports that various companies, from Microsoft to Amazon and Softbank, are all looking to help prop up the struggling ChatGPT maker, NVIDIA CEO Jensen Huang recently fielded questions about its own firm's involvement.

OpenAI is facing huge pressure from Google Gemini, whose resurgent models have beaten OpenAI not only in general benchmarking, but also efficiency. Google Gemini exists within a company that controls the entire stack, from server tech to models, to research, and then endpoints. OpenAI relies on inefficient and complex partnerships with third-party companies, such as NVIDIA and Microsoft, in order to operate.

Many of these deals don't exactly favor OpenAI particularly well, sealed in the company's early years. OpenAI has also been struggling to get users to actually pay for its services. Despite having hundreds of millions of monthly active users on ChatGPT and its other products, the vast majority of those users are completely unmonetizable.

OpenAI has been flirting with including ads and product recommendations to build revenue, but doing so risks exacerbating ChatGPT's exodus to Google Gemini and other competing products.

Speaking with CNBC, NVIDIA CEO Jensen Huang said that reports that his firm was "unhappy" with OpenAI were "nonsense."

Jensen Huang was responding to reports that the chip giant and the world's most valuable company was exploring a $100 billion investment in OpenAI. The reports began circling last fall, although the investment never materialized. Why? NVIDIA was reportedly unhappy with OpenAI's business model, which, on paper, doesn't seem like a sure-fire thing to the untrained eye. NVIDIA apparently disagrees.

"We're going to make a huge investment in OpenAI," Huang said. "I believe in OpenAI, the work they do is incredible. They are one of the most consequential companies of our time, and I really love working with Sam."

Huang said that Sam Altman is still working on OpenAI's latest investment round, with some reports suggesting it could come with valuations of anywhere up to $830 billion dollars — which would be record-breaking.

"We will invest a great deal of money, probably the largest investment we've ever made," Huang said, but denied reports that it would be anywhere near the previously-rumored $100 billion.

OpenAI's future hangs in the balance

The entire circus around artificial intelligence doesn't look to be ending any time soon. Despite having no apparent path to profitability, insiders at companies like Microsoft, NVIDIA, Amazon, Softbank, and various others are still lining up to burn cash on the chatbot maker.

On the face of it, OpenAI could only realistically achieve serious returns for investors by replacing human workers at a scale unlike anything we've ever seen in history. The idea that OpenAI can possibly deliver on some of these sky-high valuations doesn't seem feasible without pandemic-scale automation being the real play here. If all ChatGPT ends up boiling down to is a "better search engine," that hardly seems like enough to justify the frenzy revolving around it.

None of Sam Altman's loftier promises have come true. OpenAI has yet to deliver any real, tangible benefits for society at scale, beyond novelties and modest productivity gains in document-heavy industries. Given how much large language models actively cost to run, it might simply end up being not be worth the effort.

Investors handed Microsoft a $440 billion rout last week, after the firm failed to show that its AI investments were delivering the types of returns that would justify its infrastructural capital expenditure.

There's clearly going to be winners and losers as a result of this new computing paradigm, but increasingly it feels like these companies know something about OpenAI that the rest of us don't ...

If I had to guess based on the situation on the ground, Google is going to end up being the frontrunner, with Microsoft absorbing the charred remains of OpenAI when payments finally come due. But what do you think?

One of the biggest aerospace manufacturers made an interesting announcement this month. It was certainly unexpected enough that I was double and triple-checking the details, unsure if I was dreaming, but it's true: Boeing will train its current and future pilots with a new system integrated with Microsoft Flight Simulator (confirmed in a press release from Boeing itself, thanks to PC Gamer).

Technically, since this new training platform is said to be "powered by" MSFS and Azure, it isn't the same as just asking its trainees to play the game, but I've seen enough corporate speak to know what that might mean. Likely stripped of its more videogame-centric features, like its career and trails modes, this "Virtual Airplane" actually hints at a more interesting departure for Microsoft's popular flight sim.

Traditionally popular with PC gamers, and later on Xbox thanks in part to Game Pass, Boeing's more serious variant is built "for use on computers and iPad devices for Boeing 737 MAX, with additional Boeing models coming soon" — MSFS 2024 already made its way to PlayStation, and in an extremely specific and restricted way, it's now moving to iOS — even if that is via a stripped-down, nerfed version of itself.

"3D simulations in light-weight devices"

While I'll likely never be anywhere close to any device running Boeing's new Virtual Airplane software in real life, it's easy for me to understand why Microsoft Flight Simulator would be used as a base. The game already painstakingly recreates the cockpits and external structure of the world's most recognizable airplanes, alongside a 3D recreation of our entire planet, so why not take advantage of that?

Realistically, and based on Boeing's description of "tools for realistic flight-deck practice", this platform is more likely a slice of the 3D first-person cockpit view in its own Boeing 737 MAX planes, without much more needed from Microsoft's simulator. Familiarizing pilots with panel layouts in tailor-made training programs running on laptops or tablets is a great idea, if an unorthodox repackaging of a flight sim game, but I'm into it.

If nothing else, it legitimizes the hours I've spent at my desk, learning the placement of a few buttons, yokes, and throttles that let me pass the training sections of Microsoft Flight Simulator with a passing grade (barely).

More seriously, it's a potentially fantastic use of the unfathomable globe-scanning detail gathered by Microsoft's Azure platform and wrangled into a 3D environment by the MSFS developers at Asobo Studio. It's advancements like these that make me realize how deep the simulation game genre can be, especially for someone who tinkers in the shallow end, looking for the best way to convince everyone else to try it.

Full-fledged aerospace manufacturers using parts in Microsoft Flight Simulator in an official training capacity is more in line with the vibes I get from die-hard sim fans whom I've met over the years, and I can respect the obsession.

Either way, you should play MSFS 2024. It's a lot more fun than you think, even just to fly over your own house — but don't knock on Boeing's HQ after a few hours, expecting to jump in any real planes. I can't be responsible for that.

FAQs

Update, Oct. 30, 2025 — The Azure outage has passed, so you should no longer have any difficulty accessing The Outer Worlds on Xbox.

Original story:

Today marks the general launch of The Outer Worlds 2, a science-fiction role-playing game (RPG) from developer Obsidian Entertainment and publisher Xbox Game Studios.

It's the team's third game this year, following the fantasy RPG Avowed in February and the early access launch of survival title Grounded 2 in July. While it's been available for a few days for anyone that coughed up extra for the Premium Edition, the standard version of The Outer Worlds 2 is live now for everyone...at least in theory.

Unfortunately, if you aren't able to access The Outer Worlds 2 right now, you're not alone. An Azure outage has taken numerous services offline, including the ability for many people to buy games on Xbox.

Obsidian Entertainment directly confirmed on Bluesky that the outage is affecting the team's games, as well as other titles.

Due to an ongoing Azure service outage, The Outer Worlds 2 may be temporarily unavailable to purchase or install on Xbox Series X|S, the Xbox app on PC, and with Xbox Game Pass Ultimate or PC Game Pass.

— @obsidian.net (@obsidian.net.bsky.social) 2025-10-30T18:26:04.320Z

Your experience may differ slightly based on your location and the what part of Xbox online services you are attempting to use.

In addition to Xbox online connectivity and other Microsoft services like Office, Amazon Web Services is having some intermittent connection issues.

When you can jump in, The Outer Worlds 2 is worth playing

When services are back online, The Outer Worlds 2 is definitely a game worth playing, no matter if you enjoyed the first game or not.

Obsidian Entertainment cleverly combines crunchy role-playing elements with vastly-improved combat, leading to a best-of-both-worlds setup that already has me eager for a replay.

Because it takes place in a new solar system, you don't have to have played the first game in order to understand what's going on.

If you haven't yet, be sure to read my review of The Outer Worlds 2, where I wrote that "If you're a returning fan, diving into The Outer Worlds 2 is a no-brainer. If you were put off by the combat, then I'd still encourage you to give it a try, as the team has vastly improved the moment-to-moment gameplay without sacrificing anything else along the way."

The Outer Worlds 2 is currently available on Xbox Series X|S, Windows PC (Battle.net, Steam, and Xbox on PC), and PlayStation 5. Like all Xbox first-party games, it's available in Xbox Game Pass Ultimate and PC Game Pass.

If you're running into errors trying to visit certain websites or use online services right now, you're not alone. That's because Microsoft Azure — the company's cloud computing platform that it and many other companies use for sites, programs, games, and more — has gone down, leading to widespread outages for a variety of services.

Downdetector — a site that aggregates reports of issues experienced with online services in real-time — began to signal that Azure and everything that relies on it was experiencing a severe outage on Wednesday morning, and issues with affected services remain ongoing.

Microsoft is aware of the problem and is actively working on resolving it, with updates coming at timed intervals on the firm's Azure status page.

"Starting at approximately 16:00 UTC, we began experiencing Azure Front Door issues resulting in a loss of availability of some services. In addition, customers may experience issues accessing the Azure Portal," wrote the company. "Customers can attempt to use programmatic methods (PowerShell, CLI, etc.) to access/utilize resources if they are unable to access the portal directly. We have failed the portal away from Azure Front Door (AFD) to attempt to mitigate the portal access issues and are continuing to assess the situation."

"We are actively assessing failover options of internal services from our AFD infrastructure," it continued. "Our investigation into the contributing factors and additional recovery workstreams continues."

The TL;DR? Microsoft is doing everything it can to find the root of the issue and take care of it so that Azure and everything that uses it can resume normal operation. Until that happens, though, all users can do is wait for a fix.

Some services hit by Azure's outage include the online functionality of Microsoft's own Office 365 apps like Word, Excel, and Outlook, as well as the business messaging and collaboration program Microsoft Teams, its AI assistant Microsoft Copilot, and the network of its Xbox gaming brand.

Some others are specific games such as the ever-popular Minecraft, digital services for Capital One banking, Starbucks, Costco, Xfinity, Walmart, and many other different programs and brands.

Even the launch of The Outer Worlds 2 has been affected, with many customers currently unable to purchase or install Obsidian Entertainment's new Xbox RPG as a result of the Azure troubles. Considering that The Outer Worlds 2 is one of Microsoft's biggest Xbox and Xbox Game Pass releases this year, it's quite unfortunate that its arrival has been hamstrung by this outage.

With any luck, we'll see a full resolution come sooner rather than later, though ultimately, only time will tell what happens. Microsoft is now in the process of rolling Azure services back to the "last known good state," which may or may not fix the problem. Hopefully it will.

It's worth noting that this Azure outage comes a little over a week after Amazon Web Services (AWS) went down, resulting in tons of different services, websites, and games going down in a similar manner. Azure going down hasn't affected quite as much, but even so, we've had some strong reminders of just how reliant the tools and programs we use on a day-to-day basis are on a select few platforms in recent times.

Microsoft is reportedly linked to a recent Red Sea cable cut that disrupted internet traffic on Saturday, September 6, 2025. Its Azure cloud platform, which relies heavily on submarine cables for global connectivity, was one of the first to confirm problems. The incident severed connections carrying around 17% of global internet traffic between Asia, Europe, and the Middle East.

The company warned customers to expect increased latency as traffic was rerouted through alternative pathways (via Tom's Hardware). It’s a stark reminder of how fragile these digital lifelines are, especially as the world leans more heavily on cloud platforms and AI services that depend on them.

Azure rerouted traffic through emergency pathways outside the Red Sea to keep services running, though performance still degraded in key areas, including India, Pakistan, and the United Arab Emirates. Microsoft has cautioned that full repairs could take weeks or even months.

What happened in the Red Sea?

According to reports, the cable cuts occurred on September 6, 2025, at around 05:45 UTC near Jeddah, Saudi Arabia. The confirmed affected systems include South East Asia–Middle East–Western Europe 4 (SMW4), India-Middle East-Western Europe (IMEWE), and FALCON GCX.

"SMW4" is an 18,800 km submarine cable system linking Singapore to France, carrying huge volumes of internet traffic between Asia, the Middle East, and Europe, while "IMEWE" is a 12,000 km system that connects India to Europe via the Middle East, and remains critical for India–Europe connectivity. "FALCON GCX", meanwhile, is a regional cable owned by Global Cloud Xchange that links Gulf states such as Kuwait through the Red Sea and beyond.

These aren’t just wires but digital highways, moving almost all intercontinental internet traffic — from streaming and cloud services to financial transactions and global business operations. Independent network monitoring for Cloudflare showed significant latency increases (via computing), around 20% slower traffic between Delhi and London, and 30% between Mumbai and Frankfurt.

The exact cause is still under investigation, though initial analysis points to what might be accidental anchor damage from commercial shipping. Geopolitical concerns remain, however, given the current climate in the region.

What comes next?

Microsoft reportedly believes it could take weeks or even months to repair the damage. Specialized ships will need to locate and lift the cables before splicing in replacements — a complex task made harder by the fact that only around 80 repair vessels exist worldwide (via GSIS).

For now, temporary fixes are in place. Traffic has been rerouted, but that means latency and performance issues are likely to persist in the short term.

The Red Sea remains one of the most crowded cable corridors on the planet, making further incidents likely, whether through accidents or geopolitical tensions. The latest cuts have also renewed discussions about alternative routes, from new terrestrial links to Arctic cables and satellites, to reduce reliance on this single chokepoint.

For now, all that most of us can do is wait and hope that investment in alternative routes moves forward. These discussions often take years before decisions are made, and even longer before new systems are in place.

With Microsoft committing $80 billion to cloud infrastructure, AI, and related services, this is not an area that can be overlooked. As these sectors continue to grow, keeping the world’s digital lifelines secure will only become more critical.

A protest on Microsoft's campus in Redmond, Washington, resulted in at least 18 people being arrested on Wednesday, August 21, 2025. Police responded to a large gathering of protesters, according to KOMO News.

Protests began on Tuesday when a group that included current and former Microsoft employees converted part of Microsoft's headquarters into a "Liberated Zone." The protest, like several others held against Microsoft this year, focused on the tech giant providing services to the Israeli government and military.

Based on statements by Microsoft, the protesters left peacefully on Tuesday and then returned on Wednesday.

According to a statement by the police, the protesters "became aggressive."

Protesters had allegedly poured red paint over a Microsoft sign, blocked a pedestrian bridge, and formed a barrier out of tables and chairs.

Microsoft shared a statement on the protests, which spanned multiple days:

"Yesterday, approximately 35 protesters gathered and protested on the Microsoft campus. When local police officers informed them that this was not permitted on private property, they left. Today, the group returned and engaged in vandalism and property damage. They also disrupted, harassed, and took tables and tents from local small businesses at a lunchtime farmer’s market for employees."

The Verge confirmed that among those arrested was Microsoft software engineer Anna Hattle. Former Microsoft employees Hossam Nasr and Vaniya Agrawal were also arrested on Wednesday.

Why are people protesting Microsoft?

Protests against Microsoft center around the tech giant's connection to the Israeli government and military. Microsoft provides several services to the Israeli Ministry of Defense (IMOD), including Azure cloud services, Azure AI services, and language translation.

Microsoft has specified that its relationship with IMOD is "structured as a standard commercial relationship." The company conducted an internal assessment and had an external review, both of which found that IMOD had not broken Microsoft's terms of service.

Many of the protests are connected to No Azure for Apartheid, a group that consists of both current and former Microsoft employees.

Protests against Microsoft have increased in frequency and scale over recent months. In April, protesters interrupted Microsoft's 50th Anniversary Event and said, "all of Microsoft has blood on its hands."

Soon after that incident, it was determined the protesters were Microsoft employees. They were later fired due to "acts of misconduct."

In May, Microsoft blocked employees from sending emails that mention Palestine or Gaza.

A group of over 60 Microsoft shareholders filed a proposal to have Microsoft publish a report on the company's "human rights due diligence processes" relating to the use of Microsoft cloud products and services.

No Azure for Apartheid has a petition signed by over 1,500 Microsoft employees.

Brian Eno, the creator of the Windows 95 startup sound, also spoke out against Microsoft. Eno also shared that the money originally received for creating the startup sound would be used to help victims in Gaza.

Report by The Guardian prompts further review

On August 6, The Guardian, in partnership with +972 Magazine and Local Call, shared the results of an investigation that revealed the Israeli military relied on Microsoft cloud service to store information. "A million calls an hour" were reportedly recorded and stored in Azure.

That report claims that Azure "facilitated the preparation of deadly airstrikes and has shaped military operations in Gaza and the West Bank."

Microsoft technology was not supposed to be used to identify targets for lethal strikes, according to a Microsoft source that spoke with The Guardian. But other sources of the outlet claim phone calls stored in Azure were used to "research and identify bombing targets in Gaza."

Microsoft updated its blog post regarding the use of its technology services in Israel and Gaza on August 15:

"Microsoft Corporation announced today that it is undertaking a formal review of allegations reported by The Guardian on August 6, 2025, relating to usage of Microsoft Azure by a unit of the Israeli Defense Forces (IDF). The Guardian, on that date, reported that multiple individuals have asserted that the IDF is using Azure for the storage of data files of phone calls obtained through broad or mass surveillance of civilians in Gaza and the West Bank. Microsoft’s standard terms of service prohibit this type of usage."

The previous review did not find any violations of Microsoft's terms by the Israeli Defense Force (IDF). But Microsoft has since expanded its review in response to the report by The Guardian.

An unnamed Microsoft spokesperson shared the following statement with KOMO News:

“The company announced last week that it is pursuing a thorough and independent review of new allegations first reported earlier this month about the purported use of its Azure platform in Israel. Microsoft will continue to do the hard work needed to uphold its human rights standards in the Middle East, while supporting and taking clear steps to address unlawful actions that damage property, disrupt business or that threaten and harm others.”

Microsoft says it will share its findings once the review is complete.

Microsoft just announced a package of solutions focused on digital sovereignty. The offering ensures that European data remains in Europe and that only Microsoft employees based in Europe will handle that data.

Microsoft Sovereign Cloud, the umbrella under which all the new solutions fall, gives organizations in Europe more control over data. It includes tools and options for customer-controlled encryption and simplified configurations. There is also support for private cloud environments.

The new solutions include Data Guardian, External Key Management, Regulated Environment Management, and Microsoft 365 Local. Microsoft announced the expansion in a blog post:

"Building on our experience delivering sovereignty solutions that meet the needs of highly regulated customers and government agencies, our Sovereign Public Cloud is an evolution and expansion of the Microsoft Cloud for Sovereignty and will be offered across all existing European datacenter regions, for all European customers, across enterprise services such as Microsoft Azure, Microsoft 365, Microsoft Security and Power Platform. Sovereign Public Cloud ensures customer data stays in Europe, under European Law, with operations and access controlled by European personnel, and encryption is under full control of customers. This is enabled for all customer workloads running in our European datacenter regions requiring no migration."

In select regions and countries, Microsoft has additional solutions to ensure sovereignty. In France and Germany, the National Partner Cloud offers Microsoft 365 and Microsoft Azure in independently owned and operated environments.

Digital sovereignty

Microsoft's announcement came shortly after Denmark's Ministry of Digital Affairs shared plans to shift away from Office 365 and Windows 11. The ministry cited digital sovereignty as the reason for the switch (emphasis added):

"It is not about isolation or digital nationalism. We should not turn our backs completely on global technology companies – many of them provide solutions that we benefit from. This applies both today and in the future. But we must never make ourselves so dependent on so few that we can no longer act freely. Too much public digital infrastructure is currently tied up with very few foreign suppliers. This makes us vulnerable."

That announcement followed similar plans from Denmark’s two largest cities to move away from Microsoft services. The Copenhagen Audit Committee explained that if people cannot send emails because of a "political fallout, that's a huge problem."

While Microsoft Sovereign Cloud focuses on enterprise infrastructure and Denmark’s recent decision centered on public sector software, both reflect the same underlying concern: data independence and control over how information is handled.

Microsoft’s new sovereignty-focused solutions offer an alternative to switching to Linux or non-Microsoft software suites, while still prioritizing data independence.

Last week, a detailed report by Bloomberg detailed the complicated nature of Microsoft and OpenAI's multi-billion-dollar partnership, including Microsoft's AI safety net if something "catastrophic" happens to OpenAI.

Microsoft's admission that Copilot is synonymous with ChatGPT but with better security, and that its allegiance isn't to OpenAI, but to availing whatever AI customers want via Azure for maximum profit gains.

During Microsoft's annual Build developer conference, the company announced that xAI's Grok 3 and Grok 3 mini are joining Azure's long list of AI models. “These models will have all the service level agreements (SLAs) Azure customers expect from any Microsoft product,” added Microsoft.

Elon Musk touted the AI chatbot as the most powerful AI service by every metric and the "most fun", too. Its fans seemingly share the same sentiments, often referring to Grok as "the most based and uncensored model of its class yet."

It's worth noting that Elon Musk's Grok AI models will be hosted and billed directly by Microsoft. What's more, the tech giant will now be able to avail the service to its product teams and services via its Azure AI Foundry service.

As you may know, Elon Musk and Sam Altman have a long-standing rivalry from OpenAI's early founding days. The Tesla CEO and billionaire filed two lawsuits against the ChatGPT makers, Greg Brockman and Sam Altman, citing a stark betrayal of its founding mission and alleged involvement in racketeering activities and a fake humanitarian mission.

As such, Microsoft hosting Elon Musk's Grok AI in Azure could likely raise tension and controversy in its partnership with OpenAI.

Interestingly, OpenAI's partnership with Microsoft has seemingly been fraying over the past few months, especially after the ChatGPT maker unveiled its $500 Stargate project, designed to facilitate the construction of data centers across the United States.

The project cost Microsoft its exclusive cloud provider status for OpenAI. Consequently, Microsoft reportedly pulled out of two mega data center deals that would have helped to provide additional training support for ChatGPT.

However, OpenAI CEO Sam Altman indicated that the company is no longer "compute-constrained," suggesting that it is capable of facilitating its sophisticated AI advances.

Last year, reports emerged suggesting that Microsoft's partnership with OpenAI had begun to fray. The software giant was apparently planning to integrate third-party AI models into its Microsoft 365 Copilot service, seemingly moving away from its overdependence on the ChatGPT maker's flagship models.

A separate report by The Information claimed that Microsoft is developing in-house models and testing third-party ones for Copilot, including DeepSeek, Meta, and Elon Musk's xAI.

Now, The Verge reports that Microsoft has plans to host Elon Musk's Grok AI model. According to the outlet's source, Microsoft has been in discussions with xAI over the past few weeks about the move.

If the deal pulls through, Microsoft will host Grok AI, making it available for its broad user base. It will also make the model available to the company's product teams via its Azure cloud service.

While Microsoft and xAI remain quiet about the existence of any deal, The Verge claims that Grok AI will be available on Azure AI Foundry.

For context, Azure AI Foundry is a generative AI development hub for developers that gives access to AI tools and models that allow them to host, run, and manage AI-driven apps.

According to the report, Microsoft only plans to host xAI's Grok model. To that end, it doesn't have plans to host the company's servers to train any of its future AI models.

As you may know, OpenAI's Sam Altman and Elon Musk have an interesting history. Musk helped Altman form OpenAI; however, the 'bromance' was short-lived, turning into a bitter feud.

Over the past few months, Elon Musk has filed two lawsuits against OpenAI and Sam Altman, citing a stark betrayal of the ChatGPT maker's founding mission. The second suit cited alleged involvement in racketeering activities and a fake humanitarian mission.

Billionaire Musk has also contested OpenAI's evolution into a for-profit entity.

OpenAI is seemingly hell-bent on transitioning into a for-profit organization, perhaps because of the mounting pressure for investors from its latest round of funding, which helped raise $40 billion, pushing its market cap to $300 billion.

Failure to meet this threshold could open up the AI firm to outsider interference and hostile takeovers. Market analysts and experts predict that Microsoft could even acquire OpenAI in the next 3 years.

Yesterday evening Microsoft posted its FY25 Q3 results, and it was pretty much a clean slate of growth across the board. Microsoft's shares rose on the news, which grew 1.2+ points in after hours trading, likely to grow further when the markets open fully later today.

"We delivered a strong quarter with Microsoft Cloud revenue of $42.4 billion, up 20% year-over-year," CEO Satya Nadella said, "driven by continued demand for our differentiated offerings."

• Microsoft's revenue hit $70.1 billion in revenue, 13% up year-over-year, with an operating income of $32 billion and a net income of $25.8 billion.
• Earnings per share hit $3.46, beating Wall Street estimates.
• Microsoft's Productivity and Businesses revenue grew 10%, driven by Microsoft 365 and Dynamics 365.
• Intelligent Cloud, which includes Azure, grew by a massive 21%, with Azure alone growing 33% year-over-year.
• More Personal Computing revenue, which includes Windows, rose 6%.
• Xbox and gaming grew by 6% overall, with hardware down 6% and content and services growing 8%. PC Game Pass grew by 45% year over year, and Xbox Cloud Gaming hit 150 million hours streamed for the quarter, up 10 million.
• Microsoft returned $9.7 billion to shareholders through dividends and stock buybacks.

Microsoft was keen to emphasize that global tariffs and geopolitical issues threaten economic certainty may undermine its future profitability in the near term, but remained optimistic on AI and cloud services as key drivers of growth. Microsoft also mentioned opportunities around its quantum computing efforts, fostered by the Majorana-1 breakthrough.

Microsoft also hailed boosted engagement with services like Copilot and Bing, noting that Copilot usage grew 35% quarter over quarter, with Copilot on Microsoft 365 servicing "100 million" users. Bing engagement also increased by 22% apparently, too.

Unfortunately, Microsoft made no mention of Surface itself in this earnings report, although it is thought that new Surface devices under the Copilot+ range are just around the corner.

Under CEO Satya Nadella, Microsoft has transformed its fortunes from legacy software company to cloud behemoth, but we might be seeing the upper limits of a maturing industry.

According to a new report by Bloomberg (thanks, Fordabrand), Microsoft is reducing its data center footprint in the United States and Europe. Bloomberg received the information via a memo originating from investment bank TD Cowen, which states Microsoft plans to reduce its leases representing "a couple hundred megawatts." Microsoft's hyperscale Azure cloud data centers typically consume around a hundred megawatts according to some sources, which suggests that this cancellation represents at least two hyperscale data centers.

Indeed, Microsoft only recently secured an additional 475 megawatts of solar power in Texas specifically for its data center aspirations, and has been exploring nuclear energy as another way to power its energy needs without boosting its carbon emissions.

The reasons for Microsoft's shift in strategy aren't entirely clear right now, with Bloomberg offering speculations on potential oversupply, with demand waning.

Considering Microsoft Copilot, its OpenAI partnership, and future-facing technologies like Xbox Cloud Gaming all require data centers to operate — it could indicate that Microsoft has found an upper ceiling to demand for these products. Everything from Xbox Live, OneDrive, Outlook, and beyond all require vast amounts of data center processing to operate.

Is Microsoft expecting slowing demand? Perhaps, but it could also indicate that Microsoft may aim to grow capacity by focusing on efficiencies rather than raw power. China's DeepSeek sent shockwaves through the industry a few weeks ago owing to its reportedly lower power consumption and boosted efficiency over OpenAI's models, although the truth may be a little murkier.

It's particularly odd, since Sam Altman of OpenAI and U.S. President Donald Trump announced only a short while ago the plan to invest upwards of half a trillion dollars into boosting American AI platforms. AI is often regarded as a national security issue these days, and the signal Microsoft is sending could be interpreted as tantamount to clearing the field for competitors.

In any case, we've reached out to Microsoft to learn more ...

UPDATE (March 26, 2025): ... and now they've responded. A Microsoft spokesperson says the firm is still investing to the tune of "over $80 billion" in growing infrastructure projects at a "record pace."

"Thanks to the significant investments we have made up to this point, we are well positioned to meet our current and increasing customer demand. Last year alone, we added more capacity than any prior year in history. While we may strategically pace or adjust our infrastructure in some areas, we will continue to grow strongly in all regions. This allows us to invest and allocate resources to growth areas for our future. Our plans to spend over $80B on infrastructure this FY remain on track as we continue to grow at a record pace to meet customer demand."

As you might already know, OpenAI and key investors, including SoftBank and Oracle, recently unveiled a new project dubbed Stargate. The project is worth $500 billion and is designed to help the ChatGPT maker build data centers in the United States for its AI advances, including AGI, which SoftBank CEO Masayoshi Son claims is coming very, very soon.

Microsoft is OpenAI's largest investor, with a 49% stake, translating to $14 billion. As part of its complicated partnership with the ChatGPT maker, Microsoft was once the exclusive cloud computing partner for OpenAI. However, OpenAI's $500 billion investment in computing infrastructure changes its relationship with Microsoft.

While Microsoft no longer holds the exclusive cloud provider status for OpenAI, a newly signed agreement grants the tech giant “right of first refusal.” For context, Microsoft will be the first option to host OpenAI workloads in its cloud infrastructure and services. However, if it can't meet the requirements, OpenAI can source the services from competitors.

The new agreement also retains 4 key elements of Microsoft and OpenAI's previous agreement, including:

• Microsoft has rights to OpenAI IP (inclusive of model and infrastructure) for use within our products like Copilot. This means our customers have access to the best model for their needs.
• The OpenAI API is exclusive to Azure, runs on Azure and is also available through the Azure OpenAI Service. This agreement means customers benefit from having access to leading models on Microsoft platforms and direct from OpenAI.
• Microsoft and OpenAI have revenue sharing agreements that flow both ways, ensuring that both companies benefit from increased use of new and existing models.
• Microsoft remains a major investor in OpenAI, providing funding and capacity to support their advancements and, in turn, benefiting from their growth in valuation.

According to Microsoft:

“OpenAI recently made a new, large Azure commitment that will continue to support all OpenAI products as well as training. To further support OpenAI, Microsoft has approved OpenAI’s ability to build additional capacity, primarily for research and training of models.”

This news comes amid reports citing OpenAI complaints about Microsoft's struggles to meet its cloud computational needs. The report further suggested that the tech giant's failure to meet its computational demands has delayed the release of next-gen AI products, hurting its chances of hitting the coveted AGI benchmarks ahead of its competitors such as Anthropic and Google.

Elsewhere, it was also reported that OpenAI has plans to scrap a stringent clause severing its partnership with Microsoft after hitting the AGI benchmark to secure more funding and extend access to its vast resources. For context, intricate details about Microsoft's partnership with OpenAI suggest that AGI, at least figuratively, constitutes an AI system generating $100 billion in profit.

Related: Investors mount pressure on OpenAI to turn into a for-profit in 2 years

This is amid bankruptcy reports, with projections of the ChatGPT maker making a loss of $5 billion in 12 months. However, a funding round from investors, including Microsoft, NVIDIA, and SoftBank, raising $6.6 billion kept the AI firm in business, pushing its market cap beyond $157 billion. Interestingly, market analysts predict Microsoft could acquire OpenAI in 3 years as investor interest in AI begins to fade. They further project OpenAI could make an additional $44 billion loss before seeing a profit in 2029, partly due to its Microsoft tie-up.

What you need to know

• A leaked spreadsheet reportedly belonging to Microsoft employees discloses that the company is paying employees in the AI division handsomely compared to counterparts in Azure and Cloud.
• An average AI software engineer is paid up to $377,611, which is $120,000 more than the average salary of an employee in the Azure division.
• Microsoft's focus has shifted to AI-themed projects like Copilot while other crucial departments seemingly take a backseat.  

Over the past few years, we've received subtle hints and rough estimates of Microsoft employees' pay scale. For instance, per a leaked payment guideline, the highest-ranking Microsoft employee receives a base pay ranging from $231,700 to $361,500, a hiring bonus of up to $1.2 million, and $1 million in annual stock awards. However, the lowest-ranking employee at the tech firm receives $42,500 with no extra compensation.

Interestingly, months before the payment guideline leak, a Microsoft insider poll disclosed that more than half of the employees were willing to leave their jobs if a better offer at a rival company presented itself. The employees cited the lack of a pay rise negatively impacted their performance index and morale, prompting them to seek greener pastures elsewhere. 

As it happens, Microsoft's AI department employees are taking a bigger check home, according to a spreadsheet obtained by Business Insider featuring intricate details about the salary ranges of Microsoft employees. This isn't surprising; Microsoft is all gas and has no brakes in AI, especially after making a multi-billion dollar investment in OpenAI's technology and integrating it across its tech stack. 

Per the spreadsheet, an average Software Engineer in Microsoft's new AI department earns up to $377,611. This is at least $120,000 more than the average salary of an employee in Microsoft's Azure and Cloud division.

AI-focused Microsoft

As you may know, Microsoft hired DeepMind and Inflection co-founder Mustafa Suleyman to lead its new AI division as part of the company's internal reorg strategy to get an early lead in the AI landscape, with products like with products like Bing, Edge, and Copilot at the forefront.

While the authenticity of the spreadsheet remains slim at best, it potentially paints a picture of Microsoft's vision for the future with AI. It also poses a bone of contention among employees as it may make some employees feel undervalued for their efforts, ultimately impacting their performance index.

Aside from the vast disparity in pay, Microsoft reportedly transferred some employees from the Teams chat app umbrella to its AI department to assist with Copilot-themed projects. Interestingly, the company announced its plans to stop shipping new Copilot experiences to users and indicated it would use the time to enhance and improve existing experiences.

RELATED: Microsoft to end the freeze on employee salaries

Elsewhere, investors have raised concerns over Microsoft's exorbitant expenditure and investment in AI and find it difficult to establish a clear path for generating revenue and profits. However, market analysts and experts say Microsoft's early investment and adoption in AI increased its market valuation, making it the world's most valuable company ahead of Apple and NVIDIA earlier this year.

According to Microsoft's latest Work Trend Index report, most company executives will only hire professionals with an AI aptitude. The execs have highlighted concern for a lack of talent to fill vacancies at their firms, prompting "a 142x increase in LinkedIn members adding AI skills like Copilot and ChatGPT to their profiles."

What you need to know

• Trouble continues to brew for Microsoft and CrowdStrike after the global IT outage, as Delta has hired a prominent lawyer to seek damages.
• Delta Air Lines reportedly lost over $350 million during the outage in flight cancellations and reimbursements.
• The outage has negatively impacted CrowdStrike's value, which lost one-quarter of its value in just two trading days.

The massive outage impacting Microsoft services, including 8.5 million Windows devices caused by a faulty CrowdStrike, seemingly continues to place both companies between a rock and a hard place.

While the digital pandemic that left thousands of passengers stranded at the airport for hours (forcing flight attendants to issue handwritten boarding passes) has since been resolved, Delta Air Lines still has a bone to pick with Microsoft and CrowdStrike. According to a report by CNBC, the airline has hired prominent attorney David Boies to seek damages from Microsoft and CrowdStrike.

Shortly after the discovery of the massive global IT outage, Microsoft issued a statement indicating that it had fixed the issue and recommended restarting devices up to 15 times to speed up recovery. Affected users were quick to shift blame for the outage to Microsoft, though it was later confirmed that the tech giant wasn't at fault. 

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Recovering from a digital pandemic

Microsoft and CrowdStrike have put elaborate measures in place to prevent the issue from reoccurring, including restricting security software like CrowdStrike's Falcon from accessing Windows 11 at a kernel level. 

Following the unfortunate incident, CrowdStrike lost almost one-quarter of its value in two trading days, with its shares falling by up to 5% after Delta hired Boles to seek damages from the company. 

For context, the massive outage set back Delta Air Lines approximately $350 million to $500 million, translating to over 176,000 refund and reimbursement requests. It's worth noting that up to 7,000 people canceled their flights.

RELATED: Microsoft 365 and Azure gets hit with a big new server outage

Delta is seemingly among the first companies affected by the buggy update to file a lawsuit against CrowdStrike and Microsoft. I guess CrowdStrike will need more than $10 erroneous Uber Eats gift cards to remedy the situation. 

This is a developing story; we'll keep you posted with more information as it becomes available.

What you need to know

• Microsoft's Azure data center infrastructure suffered an outage yesterday. 
• Services powered by Azure systems suffered downtime, including banks, and other major businesses. Microsoft's own services like Outlook were also disrupted. 
• Microsoft was quick to mitigate the outage, and today, issued an explanation for the downtime. 
• A distributed denial of service (DDoS) attack triggered the initial outage, but then Microsoft amplified the issues with a faulty mitigation measure.  
• Microsoft apologized for the downtime. 

Cybersecurity is a hot topic right now, and Microsoft often finds itself in the crosshairs. 

Last week, a massive and unprecedented flaw in Crowdstrike endpoint protection software killed millions of computers and kiosks worldwide, leading to widespread disruption for various critical infrastructure businesses. Airlines, banks, and more suffered downtime, causing chaos for customers and billions in losses globally. Crowdstrike has also lost billions in market capitalization after the event, leading Microsoft to lead calls to close off regulator-mandated vendor access to the Windows kernel. 

For IT departments impacted by the downtime, a new Azure outage was probably the last thing they wanted to see across their desk first thing in the morning. Alas, that's what happened. 

Yesterday, Azure and services tied to Microsoft's data center infrastructure suffered a global outage, hitting thousands of businesses worldwide. Email access and other systems like authentication services failed, causing another spree of widespread disruption. Microsoft was fairly quick to rectify the issue, thankfully, and has today offered a broader explanation. 

"An unexpected usage spike resulted in Azure Front Door (AFD) and Azure Content Delivery Network (CDN) components performing below acceptable thresholds, leading to intermittent errors, timeout, and latency spikes," the status page reads. "While the initial trigger event was a Distributed Denial-of-Service (DDoS) attack, which activated our DDoS protection mechanisms, initial investigations suggest that an error in the implementation of our defences amplified the impact of the attack rather than mitigating it."

Simplified, DDoS attacks refer to "distributed denial-of-service" events, by which an attacker sends millions, maybe billions of bogus requests at server infrastructures, overloading the system. Typically these attacks are delivered by botnets, where malware infected computers join in on the attack simultaneously in a co-ordinated manner. Microsoft states that its systems weathered the initial wave of attacks, but it was ironically their preventative measures that exacerbated the attack, rather than mitigated it. 

Microsoft's Azure infrastructure is incredibly robust against these types of attacks, which have increasingly been utilized by hostile state-backed hacking groups to attack domestic infrastructure in recent years. Groups often associated with Russia, North Korea, and China are often held responsible, although Microsoft has yet to point any blame for this particular effort. 

Diversifying global IT infrastructure

Cyber attacks of all shapes and sizes are evolving all the time, and so too much the tools used to defend against them. Microsoft is at the forefront of this battle, naturally, owing to its global server apparatus and its status as a service provider to nation states and defence departments. Microsoft has been contributing to Ukraine's cyber defence effort for example, and provides the infrastructure the U.S. defence department. It has also been the victim of Russia-backed cyber attacks, including communication theft, which has resulted in embarrassing hits to its cybersecurity credibility. 

We don't know a lot of details about yesterday's particular outage in terms of blame, but the fact Microsoft admitted that its own preventative measures amplified the issues is likely to lead to more questions of priorities. With the age of AI platforms helping hostile actors automate some of their processes, I suspect cybersecurity is going to be an ever-increasingly hot topic in the coming years. 

What you need to know

• If you're experiencing issues with Microsoft services right now, chances are you're not alone. 
• Microsoft reported a major Azure outage this morning, affecting services like Microsoft 365, Outlook, and more. 
• The system seems to be in a recovery state right now, although users may still be experiencing issues for the time being. 

Microsoft has been hit with another major outage, hot on the heels of last week's Crowdstrike drama. 

Now, services tied to Azure, including Microsoft 365, Xbox network, Outlook, OneDrive, and others have been experiencing issues, with Down Detector experiencing a spike in connection issue reports. 

Azure is Microsoft's global cloud network, with dozens of data centers dotted around the globe. The network outage appears to be impacting every region across the globe, although Microsoft's Azure for Government section remains unaffected, owing to the additional contingencies put in place for nation states. 

The warning on the Azure status page reads as follows:

"Network Infrastructure - Issues accessing a subset of Microsoft services

Starting approximately at 11:45 UTC on 30 July 2024, a subset of customers may have experienced issues connecting to Microsoft services globally.

Current Status: We have implemented networking configuration changes and have performed failovers to alternate networking paths to provide relief. Monitoring telemetry shows improvement in service availability from approximately 14:10 UTC onwards, and we are continuing to monitor to ensure full recovery."

Questions of IT infrastructure are a hot topic right now

During the Paris Olympics, French security services reported various attacks on local IT infrastructure, including fibre optic cables and the like. There has also been some high-profile nation-backed cyberattacks on network infrastructure devices, including notorious router hacks, as well as embarrassing security breaches across Microsoft's own email systems. 

Last week's big Crowdstrike snafu knocked out millions of kiosk computers across the globe, bringing down payment systems, flight tracking systems, and other critical infrastructure platforms based on Windows. Microsoft was forced by regulators in previous years to allow third-party vendors full access to the Windows kernel to sell security solutions. After giving Crowdstrike a huge degree of control over Windows security endpoints, Microsoft is now calling on regulators to be handed back full control over the keys to Windows' security apparatus. 

RELATED: Your Microsoft 365 subscription now comes with a free VPN

In a world where hostile nation states are exploiting security weaknesses across Western infrastructure platforms, cybersecurity has become a more critical issue than ever before. These types of outages on Azure (however brief) don't exactly help Microsoft's credentials, though, when it's making arguments to be given back the keys over Windows' security direction. 

What you need to know

• Microsoft's heavy investment in AI projects is raising concern among investors.
• Its Azure cloud business' growth remained steady quarter-over-quarter at about 31% between April and June, despite Microsoft's significant investment.
• Microsoft says it needs to continue investing in data centers to meet the ever-growing and high demand for AI.

Microsoft's recent shift and absolute focus on AI has raised concern among its investors. The tech giant ventured into the AI landscape face-first after investing billions of dollars in OpenAI to further extend their complicated partnership.

"Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry," indicated Microsoft CEO Satya Nadella during the company's earnings call for FY24 Q3. Admittedly, the company reported revenue increases (up 17%), operating income (up 23%), net income (up 20%), and diluted earnings per share (up 20%). 

According to a report by The AI Wired, investors have raised concern over Microsoft's spending on its cloud business. Admittedly, Microsoft's Azure cloud business has been positively impacted by the company's AI ventures. However, whether it justifies the billions invested in the category is unclear.

Interestingly, this news comes after a report suggested that OpenAI might be on the precipice of bankruptcy, with projections of $5 billion in losses. The ChatGPT maker might need another round of funding to remain afloat. 

A recent study indicates that 30% of AI projects might be abandoned after proof of concept by 2025. It attributes its predictions to poor data quality, a lack of guardrails, and high operation costs. 

While AI played a significant role in Microsoft's financial success in its latest earnings call, investors hope to spot a more considerable difference in the fiscal fourth quarter. Microsoft's Azure cloud business grew by 7% in the first three months of the year, with expert analysts predicting an expenditure of $13.64 billion compared to the $10.95 billion from the previous quarter. 

The AI landscape is a hard market to crack

Market analysts have seemingly misread AI's earning trends and growth. For instance, Google's quarterly expenditure was approximately $1 billion more than expected. However, the payoff from its AI investment was "modest," further building on the investors' concern about the heavy investment in data centers and AI projects with little return to show. 

Google's parent company, Alphabet, will continue to set aside approximately $12 billion on capital projects every three months for the rest of 2024. However, investors are interested in seeing how Microsoft will grow its revenue in the AI landscape.

Google CEO Sundar Pichai recently indicated the "risk of under-investing (in AI infrastructure) is dramatically greater than the risk of over-investing." Microsoft justifies its massive capital injection in the AI landscape by stating that it needs to spend more on data centers to meet the high demand for AI. 

The tech giant claims it is getting more business for its large enterprise clients due to its AI-powered features, including the Microsoft 365 Copilot available across Word and Excel. Over half of the Fortune 500 companies pay Microsoft Copilot's $20 monthly subscription fee to make their workflow more effortless and less redundant. 

Elsewhere, the hype building around AI PCs and the looming death of Microsoft's Windows 10 operating system has contributed to a 3% growth in the global PC market in Q2 of 2024.

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What you need to know

• Microsoft and Lumen announced a partnership that expands Microsoft's network capacity.
• The partnership should help Microsoft meet the growing demand for AI.
• Lumen will migrate to Microsoft Azure and use the Microsoft Cloud as part of the partnership.
• Microsoft and Lumen have a longstanding relationship that includes Lumen using Microsoft Copilot to reduce employee workloads and Lumen services integrating with Microsoft Teams.

Microsoft and Lumen, a global communications company, announced a partnership that should help Microsoft meet the growing demand for AI. Microsoft announced the partnership and outlined how it will expand network capacity.

The computing capabilities of datacenters port Microsoft Cloud. Tools like Azure OpenAI Service and Microsoft Copilot require quite a bit of computing power, so Microsoft needs to scale up its offering. The tech giant will use Lumen as a supplier for network infrastructure.

Microsoft Corporate Vice President of Azure Core Product and Design, Erin Chapple, said this of the partnership:

“AI is reshaping our daily lives and fundamentally changing how businesses operate. We are focused both on the impact and opportunity for customers relative to AI today, and a generation ahead when it comes to our network infrastructure. Lumen has the network infrastructure and the digital capabilities needed to help support Azure’s mission in creating reliable and scalable platform that supports the breadth of customer workloads—from general purpose and mission-critical, to cloud-native, high-performance computing, and AI, plus what’s on the horizon. Our work with Lumen is emblematic of our investments in our own cloud infrastructure, which delivers for today and for the long term to empower every person and every organization on the planet to achieve more.”

Lumen has a Private Connectivity Fabric, which is a custom network that provides dedicated access to fiber within the company's network as well as the installation of new fiber. The Private Connectivity Fabric also includes the use of Lumen's digital services.

The partnership will also see Lumen migrate its workloads to Microsoft Azure and use Microsoft Entra solutions. Microsoft explained that the partnership will "improve Lumen’s cash flow by more than $20 million" in the coming year.

“Azure’s advanced global infrastructure helps customers and partners quickly adapt to changing economic conditions, accelerate technology innovation, and transform their business with AI,” said Chapple. “We are committed to partnering with Lumen to help deliver on their transformation goals, reimagine cloud connectivity and AI synergies, drive business growth, and help customers achieve more.”

Microsoft and Luman have a longstanding partnership that includes the latter using Microsoft Copilot to automate tasks with the aim of reducing employee workloads. That relationship is now expected to continue for multiple years.

AI's high power demand

AI is all the rage in 2024, but the technology drives a high demand for power, both computing and electrical. The new partnership between Microsoft and Lumen helps increase capacity on the networking side of things, but there is also a growing demand for electricity. Microsoft and Google now consume more power than over 100 countries. AI usage requires roughly one water bottle worth of water for cooling per query to tools such as ChatGPT.

Elon Musk warns that there may not be enough power for AI by 2025. OpenAI founder and CEO Sam Altman suggests nuclear fusion as a solution to the growing power demands of AI.

The skyrocket in demand for AI tools has left several industries rushing to meet demand. Lumen and Microsoft's partnership should help meet networking demands. Now, tech giants need to coordinate efforts to have enough power to handle all of the AI features that will be used in the future.

What you need to know

• Last week, the world woke up to a global digital pandemic that was caused by a faulty CrowdStrike driver that negatively impacted Microsoft services.
• Dave Plummer, a former Microsoft Windows developer, has shared a YouTube video breaking down intricate details about the global IT outage.
• Plummer believes the outage was caused by null bytes in the driver's dynamic data file.

Last week on Friday, the world woke up to what experts are now referring to as the "biggest IT outage the world has ever seen." The massive outage caused by a faulty CrowdStrike kernel driver impacted approximately 8.5 million Windows devices.

The digital pandemic affected Microsoft services, including networking and cloud computing. The dreadful Blue Screen of Death (BSoD) error characterized the issue. Microsoft and CrowdStrike consequently issued statements indicating that they'd fixed the problem, but it would take time for the services to be fully restored.

Microsoft recommended restarting devices up to 15 times, to expedite the restoration of the services. We've gotten different accounts explaining the root cause of the widespread global IT outage from Microsoft and CrowdStrike officials.

Dave Plummer (aka Dave's Garage), is a former Microsoft software engineer well-known for his contributions across the Windows ecosystem, including adding ZIP file support and more. He recently shared a YouTube video explaining the digital pandemic caused by CrowdStrike.

For context, Plummer's work as a Windows Developer at Microsoft involved debugging BSoD errors, though he admits CrowdStrike's outage was different. Interestingly, Plummer added that he was traveling in New York amidst the chaos, leaving him stranded at the airport.

While Plummer states the process of debugging BSoD errors was straightforward, he refers to issues affecting the kernel driver as "the hardest to sort out." He further indicated that the kernel operating system uses a ring system to bifurcate code into two distinct types of kernel modes for the operating, including kernel mode for the operating system and user mode that facilitates the running of software applications. 

Kernel mode is more privileged and has access to the entire system memory map and what's in memory on any physical page. On the other hand, user mode only has access to the memory map pages that the kernel wants you to see. It is also worth noting that when the application code crashes, the application crashes, too. Whereas, when the kernel mode crashes, the entire system crashes — which is why users encounter the dreadful BSoD error.

Plummer notes that this isn't specific to the Windows operating system, but a general protective measure across all modern systems, including Linux and Apple's macOS. This is where CrowdSrike's Falcon security service comes in. It helps keep malware at bay and offers robust protection for servers. It's worth noting that the service operates in kernel mode. It monitors and analyzes how an application runs in case of attacks, since it has access to system data structures and services.

Why was Windows part of the chaos?

Running code in kernel mode is no easy feat. For context, Microsoft offers the WHQL (Windows Hardware Quality Labs) certification in such instances as proof that the drivers have undergone testing and have been certified to run on Windows. The tech giant only issues the digital certificate after running tests. However, it only remains valid as long as no alterations are made to the driver after testing.

CrowdStrike aims to keep Falcon updated with the latest security features to keep up with sophisticated attacks. In essence, this would require the company to create a new driver for each update, which would also mean new WHQL certification for the driver. With the rapid changes and prompt deployment of attacks, this wouldn't be feasible, as the turnaround time could take weeks.

As a bypass to this issue, CrowdStrike features dynamic definition files that the driver can process without necessarily being part of the initial driver package. This way, the company can avoid the long certification and testing processes and still be able to ship new updates to counter potential threats to the system.

However, the approach isn't entirely smooth. The dynamic files are complete programs written in code that the driver can execute and run unsigned code in kernel mode and run. The driver remains the same and doesn't warrant fresh certification, new updates change its operation which in turn presents security threats.

While reports indicate the service crashed because of an invalid memory reference, Plummer suggests the issue could've been caused by null bytes in the dynamic data file. During the massive global IT outage, concerned users threw Microsoft under the bus (though subsequent reports confirmed that the company wasn't behind the digital pandemic).

The Windows operating system ships with many features designed to handle such issues, including booting with the last known good configuration. However, CrowdStrike's driver is marked as a boot driver. For context, boot drivers are crucial when restarting the operating system. Therefore, CrowdStrike's driver may be designated as a boot driver to protect Windows devices — hence the persistent BSoD error reports.

What you need to know

• A huge Microsoft outage today has caused chaos across airports, hospitals, banks and more and has been described as a "digital pandemic".
• The error, caused by a bug in CrowdStrike will cause widespread issues for days to come yet, as people sleep in airports and health services globally try to recover.
• Of course, people on the internet have still been able to make memes, many memes. 

If there's anything human beings do well in times of crisis, it's buy massive volumes of toilet paper and make memes about catastrophes. Today, the Crowdstrike outage led to a global meltdown as planes were grounded, 911 lines went down, health procedures were delayed, and the most crucial disaster, Starbucks mobile orders ceased to function.

The whole crisis has been referred to as a "digital pandemic" by many tabloids, and while it may not have resulted in people queuing at Costco for bulk orders of toilet paper, it has thrown out some of the best memes I've seen in a long time. Here's our round-up of the best that social media had to offer in these trying times:

Remember the millennium bug?

As the year 2000 approached, those of us old enough to remember will recall how the world held its breath for a digital meltdown... and absolutely nothing came of it. It looks like the millennium bug was just a little tardy.

What a first day

While it wasn't this guy's actual first day, his commitment to the meme throughout the day has been stellar. Vincent has since changed his bio to "Former Crowdstrike employee, fired for an unfair reason, only changed 1 line of code to optimize. Looking for a job as a Sysadmin."

ex-UK Prime Minister catching strays

Liz Truss, the ex-UK Prime Minister famed for lasting less time in power than a lettuce, has even caught some strays in the fray today. Already subject this week to a King's Speech decreeing that " the mistakes of Liz Truss's 'mini-budget' cannot be repeated"— a comment that has since been removed at her request—she's now been blamed for Microsoft's transgressions, too. What a resume. 

You know it's good when it gets Community noted

Ah the iconic Blue Screen of Death (BSOD), while airport screeen have genuinely been affected, the Vegas Sphere was just a great joke. So great too many people fell for it and its currently showing Community note suggestions including "Fake News. The photo is from 2023, and the Sphere is located in Las Vegas, not Los Angeles."

Never forget the Suez Canal

More blue screen of death

The comment "wait are these real?" is the funniest part of this tweet. Yes, the world really is completely melting down right now!

Special mentions

The self-own...

62 minutes could bring your business down say Crowdstrike on its own website, well one update today took less than that...

Crowdstrike is now fixed

Here's how to fix the Crowdstrike Blue Screen error on Windows 11 if you're still having issues. The disaster may now be over, but many services will be recovering for days to come. And, of course, the memes will live on. 

What you need to know

• Microsoft services have been impacted by a global outage, reportedly caused by bugs affecting Crowdstrike.
• Crowdstrike has posted that the issue has been identified and isolated, and a fix has been deployed but many services need to restart and are stuck in a boot loop.
• Azure has been effected along with Microsoft 365 apps. Microsoft's 'fix' for this instructs users to restart multiple times, "as many as 15," to restore service.

It's been a wild morning for services dependent on Microsoft, with widespread global IT outages some reporters are referring to as a "digital pandemic." Planes have been grounded, bank account access frozen and even 911 operators affected by the Blue Screen of Death (BSOD).

The mass outage, caused by an issue with security software Crowdstrike, has reportedly been "identified and isolated" with a fix deployed. Still, for the fix to work, many services must reboot. The old "turn it off and on again" will save us, and if it doesn't, don't worry—Microsoft says just do it 15 times. Yes, really. Azure servers are affected, and consequently, Microsoft 365 apps, with the website's most recent update, instruct users to reboot as many times as it takes to get the fix working. 

Additionally, those on Windows 11 who are also affected now have a fix, as we've detailed in our new "How to fix CrowdStrike Blue Screen error on Windows 11" guide.

You can read the full update on Microsoft's website, but this is the part we found particularly amusing.

"We have received reports of successful recovery from some customers attempting multiple Virtual Machine restart operations on affected Virtual Machines. Customers can attempt to do so as follows:

• Using the Azure Portal - attempting 'Restart' on affected VMs
• Using the Azure CLI or Azure Shell (https://shell.azure.com)

https://learn.microsoft.com/en-us/cli/azure/vm?view=azure-cli-latest#az-vm-restart

We've received feedback from customers that several reboots (as many as 15 have been reported) may be required, but overall feedback is that reboots are an effective troubleshooting step at this stage."

Other solutions suggested by Microsoft are "forcing an unexpected reboot. See, the driver hooks the function by patching the system call table, so it's not safe to unload it unless another thread's about to jump in and do its stuff, and you don't want to end up in the middle of invalid memory."  Or maybe that entire quote is from The IT Crowd, but the part about rebooting 15 times is actually real. If it works, it works! 

Chaos around the world

Crowdstrike is a cybersecurity firm based in the US that uses cloud-based AI and machine learning to prevent cyber attacks. It's used by government agencies, airports, and banks, amongst many others, and the update to its Falcon Sensor software has caused chaos with Windows, Microsoft 365, Amazon, and even Instagram. Microsoft has since suffered a separate outage due to the configuration change in the back end of Azure's settings, which has been fixed, but you may need to go through many restarts to see an improvement. What's most worrying is how easy it's been for this to happen. With so many systems across the world all dependent on the same software, turning it "off and on again" isn't as simple as it sounds.

Meanwhile, not everyone is unhappy about the outages, and some workers have been celebrating the early Friday finish a lack of working IT equipment has gifted them. Or alternatively, being annoyed that their laptops are working amongst the chaos.

This is a developing story and we're keeping tabs on it. Keep an eye on on our coverage for new updates, statements, and more. 

What you need to know

• One of the biggest IT outages in history occurred this morning and is still underway.
• Many flights are grounded due to the outage and 911 services and banks are affected.
• A CrowdStrike kernel driver appears to be the main cause of the CrowdStrike outage, making mitigating the issue complicated and difficult.
• CrowdStrike has identified the issue, isolated it, and deployed a fix, though affected systems need to be online for that fix to take effect.
• It has been confirmed by CrowdStrike that the situation is not a cyberattack or security incident.

Windows device around the world are down right now, showing the infamous Blue Screen of Death (BSOD). The Microsoft outage centers around a faulty driver deployed by CrowdStrike. The bug has caused planes to be grounded, banks to run into issues, and even affected 911 emergency services. It is the one of the largest IT outages in history, and its effects will be widespread.

The CrowdStrike outage led to a massive spike in outages and issues on service issue tracker Downdetector. 

How will the Microsoft / CrowdStrike outage affect travelling?

If you are travelling today, you should expect severe delays. Information boards in airports cannot show details (or anything but the BSOD) until the bug is fixed. Several airlines have advised customers to arrive early to give more time to the airlines. EasyJet, an airline in the UK, said customers should arrive three hours early because the airline has to use pen and paper to process people.

We're checking for updates from airlines regularly, but you should expect that other airlines will have to adjust operations to deal with the issue. Considering the global scale of the CrowdStrike outage, millions of people could be affected.

Since a fix for the issue has been deployed, some affected services are already back online, but the situation is expected to continue as devices receive proper fixes. 

One customer shared a hand-written boarding pass that was required in India due to the outage. Videos of JFK airport show the chaos caused by the outage.

With the issue affecting airports around the world, delays will likely continue even after the bug is fixed. So many people go through airports each day that delays cause backups that can take hours to ease.

911 services down

The internet outage has also caused 911 services to be unavailable in several areas. The entire state of Alaska is said to not have 911 services right now. Non-emergency call centers are also affected, according to the Alaska State Troopers on Facebook. There are direct numbers that people can call, but many will not know those numbers off the top of their head.

911 outage reports spiked on Downdetector and then dropped to lower rates, but it still appears many are affected by the outage.

What you need to know

• Microsoft was recently impacted by another round of layoffs affecting its HoloLens 2 and Azure departments.
• This is despite the tech giant's impressive earnings and rise to become the world's most valuable company, with $3 trillion in market capitalization.
• A leaked email memo suggests that Microsoft is making changes (layoffs) in its Azure department to pave the way for its AI advances and efforts.

Microsoft has been hit by layoffs, cutting across virtually all its departments. At the beginning of 2023, the company CEO Satya Nadella announced that it would cut 10,000 jobs by the end of FY23 Q3. The bloodbath continues with the most recent round of layoffs affecting the company's gaming department. 1900 people lose their jobs across Activision Blizzard, Xbox Game Studios, and ZeniMax Media.

The Redmond giant is in top form and is now the world's most valuable company, ahead of Apple with over $3 trillion in market capitalization. Market analysts predict Microsoft is on the verge of hitting its iPhone moment with AI, consistent with its latest earnings call report.

With the vast increase in revenue, operating income, net income, and more, you'd suppose Microsoft would dial down on the massive layoffs. But this isn't the case. Earlier this week, Microsoft announced another round of layoffs. This time, affecting 1,000 employees in its HoloLens 2 and Azure departments (via CNBC).

Interestingly, a Microsoft Spokesman confirmed that the company isn't pulling the plug on the production of the augmented reality headset and intends to stay the course while speaking to The Verge:

"We remain fully committed to the Department of Defense’s IVAS program and will continue to deliver cutting-edge technology to support our soldiers. In addition, we will continue to invest in W365 to reach the broader Mixed Reality hardware ecosystem. We will continue to sell HoloLens 2 while supporting existing HoloLens 2 customers and partners."

Microsoft's big push for AI might be the problem

As it turns out, Microsoft is seemingly making these changes and layoffs to pave the way for its AI advances and efforts. In a leaked memo seen by Business Insider, executive Jason Zander indicated:

"Our clear focus as a company is to define the AI wave and empower all our customers to succeed in the adoption of this transformative technology. Along the way, we make decisions that align with our long-term vision and strategy while ensuring the sustainability and growth of Microsoft."

For context, Zander used to lead Azure and now runs the Strategic Missions and Technologies (SMT) team. SMT runs point on Microsoft's cutting-edge projects like quantum computing and more. However, the company has seemingly shifted its focus to AI. 

RELATED: Ex-Microsoft HR VP reveals why most executives don't take pay cuts to prevent massive layoffs

Consequently, Zander stated that Microsoft intends to halt services in preview, including Azure Operator 5G Core (AO5GC) and Azure Operator Call Protection. Interestingly, Azure's Operator Nexus team will transition to the Cloud + AI organizations' Azure Edge and Platform product line. This isn't exactly new in Microsoft's AI playbook. A few days after the EU antitrust watchdog forced Microsoft to unbundle Teams from Office 365 globally, we learned that the company had transitioned some of its staffers from the Teams Chat app to help with Copilot AI-themed projects. 

In a separate report, Microsoft insiders have openly aired their concerns regarding Microsoft's complicated relationship with OpenAI, citing it has turned into an overnight "glorified IT department for the hot startup." 

Insiders further indicated that the complicated relationship has negatively impacted Microsoft's AI Platform team, which is central to homegrown AI advances and development. 

Unfortunately, this contributed to the loss of one of Microsoft's top executives. Microsoft is reportedly overreliant on OpenAI for most of its AI advances, which has led to the death of products like Azure Cognitive Search, Azure AI Bot Service, and Kinect DK.

What you need to know

• Truecaller is an app that can block spam calls and identify phone numbers.
• The app can also handle phone calls for you using a digital voice.
• Now, Truecaller Assistant can create a digital copy of your own voice to answer phone calls.
• Truecaller uses Microsoft Azure AI Speech to replicate your voice.

Truecaller is a popular app for handling phone calls and preventing you from having to deal with spam. The app can identify numbers, keep an eye out for SMS fraud, and answer phone calls for you. Now, Truecaller can handle those calls with a digital replication of your voice.

The ability to replicate your voice is powered by Microsoft Azure AI Speech. That Azure technology was first released to some users at Ignite 2023 last November, but it is now generally available. Microsoft detailed the ability to create personalized voices with Azure AI Speech in a recent blog post.

Azure AI Speech can be used in a variety of situations, such as translating speech to sound as if the original speaker is speaking in another language. The tool can also be used for video content creation, audiobooks, and podcasts. Voice assistants, such as the one now available through Truecaller, can be made with Azure AI Speech as well.

"By integrating Microsoft Azure AI Speech’s personal voice capability into Truecaller, we've taken a significant step towards delivering a truly personalized and engaging communication experience. The personal voice feature allows our users to use their own voice, enabling the digital assistant to sound just like them when handling incoming calls, said Truecaller in a recent post.

"This groundbreaking capability not only adds a touch of familiarity and comfort for the users but also showcases the power of AI in transforming the way we interact with our digital assistants."

Microsoft has several safeguards in place surrounding its digital voice technology. The feature requires consent from the original speaker and disclosure of the fact that the voice is synthetic. Microsoft also prohibits using Azure AI Speech to impersonate a person or deceive people using a digital voice. Impersonation of voices has filled headlines recently with accusations of OpenAI copying Scarlett Johannson's voice.

To help with security, Microsoft automatically adds a watermark to speech output created with personal voices. The tech giant cites 99.7% accuracy when detecting watermarks in audio recordings.

Truecaller has its own security features as well, including the app specifying that a voice is a digital replication.

To create a digital copy of your voice, you just need to let Truecaller record a few seconds of your actual voice. The feature requires the latest version of the Truecaller app and a subscription to Truecaller Premium, which costs $4.99 per month.

While it's in a different sector, we've heard digital voices made with Azure before. Stardock used eight hours of AI-generated voiceover in Galactic Civilizations IV: Supernova. My interview with Stardock's Brad Wardell about the game and its AI-generated voices includes examples of a voice actor and a digital copy of his voice, which should give you a gauge for how realistic Azure-created voices can sound.

What you need to know

• Microsoft's Azure AI Studio just shipped to broad availability to help developers build custom Copilot apps.
• OpenAI's GPT-4o model has also been released to Azure AI Studio as an API for a richer user experience.
• Microsoft also announced Phi-3-small, Phi-3-medium, and Phi-3-vision, a new multimodal model as part of its Phi-3 family of AI small language models (SMLs).

Microsoft is currently holding its annual developer conference, Build 2024 in Seattle. While the event is centered on AI PCs and Windows 11 on Arm, Microsoft has also made a handful of announcements around its AI efforts, particularly in its Microsoft Azure cloud service.

The tech giant says the new advances in Azure will help users build "transformational" AI experiences, further stating, "there’s never been a more exciting time to be a developer."

Right off the bat, Microsoft has announced that its Azure AI Studio has finally shipped to broad availability. For context, Azure AI Studio is an important pro-code tool that allows developers to build custom Copilot apps while simultaneously promising responsible and safe development. The platform also features a user-friendly interface coupled with code-first capabilities, including AZD and AI Toolkit for VS Code to promote effectiveness and efficiency. 

OpenAI's GPT-4o makes its way to Azure AI Studio

Last week, OpenAI announced its new flagship GPT-4o model with "GPT-4-level intelligence." The new model was already available in preview in Azure OpenAI Service, allowing developers to use the service to integrate GPT technology into apps.

And now, Microsoft has announced that the model is available as an API in Azure AI Studio. Devs can now leverage its capabilities to integrate text, image, and audio processing into a single model. When coupled with the recently enabled GPT-4 Turbo with Vision, developers can build apps with inputs and outputs that space across text, images, and more for a richer user experience.

Microsoft announces a new multimodal model as part of its lightweight Phi-3 family of AI SMLs

Last month, Microsoft debuted its super-lightweight AI model that's as capable as GPT-3.5, Phi-3 Mini. Now, the company has announced Phi-3-small, Phi-3-medium, and Phi-3-vision, a new multimodal model as part of its Phi-3 family of AI small language models (SLMs).

According to Microsoft:

"Phi-3 models are powerful, cost-effective and optimized for resource constrained environments including on-device, edge, offline inference, and latency bound scenarios where fast response times are critical."

The models also ship with Phi-3-vision which supports general visual reasoning tasks as well as analytical reasoning for charts, graphs, and more. Users can also input images and text into the model and output text responses.

Microsoft has also integrated Phi-3-mini into Azure AI’s Models-as-aService (MaaS) service. Additionally, Microsoft is also bringing new capabilities across APIs to support multimodal experiences. 

Finally, Microsoft is shipping several new features to Azure AI Speech in preview, including speech analytics and universal translation. These features are designed to help developers build high-quality and voice-enabled apps. 

What you need to know

• OpenAI announced GPT-4o, its latest flagship model, yesterday.
• GPT-4o is now available in preview in Azure OpenAI Service.
• Developers can use Azure OpenAI Service to integrate GPT technology into applications.

OpenAI CEO Sam Altman promised magic from the company this week. While some were disappointed by the live stream, OpenAI did announce a new flagship model in GPT-4o. The new model brings "GPT-4-level intelligence to everyone," including free users, as explained by OpenAI. Now, developers can integrate GPT-4o into applications through Azure OpenAI Service.

Microsoft's support page explaining what Azure OpenAI Service is only lists the GPT-4 series and GPT-3.5 series at the moment, but it should be updated soon. The company announced the launch of GPT-4o to Azure AI shortly after OpenAI's event concluded.

"Microsoft is thrilled to announce the launch of GPT-4o, OpenAI’s new flagship model on Azure AI," said Microsoft. "This groundbreaking multimodal model integrates text, vision, and audio capabilities, setting a new standard for generative and conversational AI experiences. GPT-4o is available now in Azure OpenAI Service, to try in preview, with support for text and image."

OpenAI showcased GPT-4o during its live event with several demonstrations. The new model is faster than its predecessor and much more capable. GPT-4o supports real-time voice communication, video analysis capabilities, and can detect and replicate emotions.

A preview playground in Azure OpenAI Studio lets developers in select regions in the United States test the capabilities of GPT-4o. 

Microsoft lists some potential ways that organizations could use GPT-4o:

• Enhanced customer service: By integrating diverse data inputs, GPT-4o enables more dynamic and comprehensive customer support interactions.
• Advanced analytics: Leverage GPT-4o’s capability to process and analyze different types of data to enhance decision-making and uncover deeper insights.
• Content innovation: Use GPT-4o’s generative capabilities to create engaging and diverse content formats, catering to a broad range of consumer preferences.

Microsoft also shared excitement about GPT-4o and "other Azure AI updates" that will be shown off at Build 2024. That developer-focused event takes place between May 21-23. Much of the excitement surrounding Build 2024 relates to Windows on Arm but AI will also be a major focus of the event. Several session titles and descriptions for this year's Build conference are about AI computing and new Windows AI features. It's safe to assume Microsoft will have more to share related to GPT-4o and the work of OpenAI, even though OpenAI snubbed Windows in favor of macOS recently.

While some may debate if GPT-4o is magical, as alluded to by Altman, the model is much more capable than previous models. GPT-4o can respond to audio in an average time of 320 milliseconds. OpenAI highlights that GPT-4o matches GPT-4 Turbo's performance on text in English and code and that it outperforms GPT-4 in non-English languages. GPT-4o is also 50% cheaper than GPT-4 when used through its API, which is a significant price difference for developers.

What you need to know

• Microsoft outlines its Surface and Azure teams leverage Azure's high-performance computing to improve the product design process for Surface devices.
• The company indicates that the technology has helped save time and resources during the design process. 
• Microsoft wants to leverage machine learning and AI in product manufacturing and development of future Surface PCs.

Microsoft is seemingly placing all its bets on generative AI. As you might have noticed, the tech giant has ramped up its efforts in the category and virtually integrated the technology across most of its products and services.

Now, the company shared a detailed blog post highlighting how its Microsoft Surface and Azure team used Azure's high-performance computing technology to revolutionize the product design process of manufacturing Surface products while simultaneously saving time and cost. 

According to Microsoft's Principal Engineer and structural designer, Prasad Raghavendra, the company integrated Abaqus, "a Finite Element Analysis (FEA) software," into Azure HPC in 2016. Abaqus helped the company solve many issues and fully transition "product-level structural simulations for Surface Pro 4 and the original Surface laptop to Azure HPC from on-premises servers."

Raghavendra indicates the availability of Azure HPC for structural simulations using Abaqus, which has completely revolutionized the product design process for Surface devices. It translated design concepts created in digital computer-aided design (CAD) systems into the FEA model. 

This made it easier for analysts to use FEA models to run numerous tests in different reliability conditions in a virtual environment rather than physically going through the entire process step-by-step. Consequently, the team ran hundreds of simulations to determine the feasibility of proposed design ideas and solutions. This ability made narrowing down potential design ideas easier, which were turned into prototypes for further scrutiny. 

Reliability and customer satisfaction remain a top priority for the Microsoft Surface team. To scale greater heights, Microsoft intends to continue using digital prototypes (FEA model) for simulation runs on Azure HPC clusters. Microsoft seeks to leverage machine learning and AI in product manufacturing and developing future Surface devices.

A bright AI-powered Surface future awaits

Microsoft unveiled its new lineup of business-focused Surface devices in March, including the Surface Pro 10 and Surface Laptop 6. The entries will ship with Intel Core Ultra, new NPUs, and display upgrades. The company is potentially leaning toward AI PCs featuring a dedicated Copilot button.

That aside, Microsoft's Windows and Surface engineering department has a new boss. When Panos Panay left the company and later joined Amazon, his role split into two. Pavan Davuluri took over the Surface wing, while Mikhail Parakhin handled everything Windows-related.

However, normalcy seems to have been restored at the company. Pavan Davuluri is now in charge of both Windows and Surface engineering. Microsoft also started selling replacement parts for Surface PCs, including screens, kickstands, batteries, SSDs, and more directly from the Microsoft Store. This strategy is designed to improve the repairability of Surface devices.

What you need to know

• Each year, NORAD tracks Santa Claus as he travels around the world delivering gifts.
• Microsoft partners with NORAD to help track the festive icon.
• This year, NORADSanta.org has been upgraded to a JavaScript based site with support for nine languages.
• That website is also hosted in six Azure Regions around the world.

'Twas the week before Christmas, when all through the house, not an accessory was stirring, not even a mouse. The GOVEE lights were hung by the chimney with care, in hopes that St. Nicholas soon would be there. The gamers were nestled all snug in their beds, while visions of Azure danced in their heads.

In non-poetic terms, that means Microsoft and NORAD (The North American Aerospace Defense Command) have teamed up yet again to help people track Santa Claus as he travels the world delivering gifts. NORAD has tracked Santa each year since 1955, and the tracking has gotten more sophisticated over the decades.

NORADSanta.org is the hub for tracking the festive icon. On December 24, also known as Christmas Eve, the website will swap over to a full-time Santa tracker. Until then, NORADSanta.org has a variety of holiday themed activities, including games and music.

Microsoft explained that its "developer elves" have swapped NORADSanta.org to a JavaScript based website. It now supports nine different languages and is hosted in six Azure Regions around the world.

The changes to the website should result in a faster experience when navigating around. The site is rather straightforward, so there's much to explain or dive into in terms of the end-user experience. Instead, Microsoft broke down how it improved the website using Azure to illustrate to developers how Azure can be used.

If you need to know where Santa is at all times, you can also use the NORAD Tracks Santa app on iOS and Android.

Showcasing Azure

NORADSanta.org serves as a showcase for various Microsoft Azure technologies. The website is an Azure static web app, which can be made with web frameworks like Angular, React, Vue, or Blazor. The site also uses Azure Front Door, which is Microsoft's cloud Content Delivery Network (CDN), and Azure Function, which is a cloud computing service for building, testing, and deploying apps.

Map-based applications can use Azure Maps, and Microsoft shows that off with NORADSanta.org as well.

Since NORAD's Santa tracker is a global site, it's worth a quick look at how Microsoft uses its Azure Maps Platform to create an interactive map:

"Azure Maps is a service that enables you to develop map-based applications with ease, using location data, map visualizations, and spatial operations. You can search, route, track, and discover location-based insights with Azure Maps, and integrate it with the Azure platform and other services. Azure Maps provides a comprehensive set of geospatial services, mapping APIs, and SDKs for web and mobile development"

You can click around an interactive map on NORADSanta.org to learn about holiday traditions from different parts of the world.

What you need to know

• Reportedly, Google has sent a letter to the UK's Competition and Markets Authority (CMA), petitioning it to take action against business practices Microsoft uses in cloud computing that it views as anticompetitive.
• Specifically, Google argues that Microsoft should not be able to restrict the use of its softwares to Azure, and that it shouldn't cost more to use them with other cloud providers.
• Google included six recommendations in its letter, including a request to force Microsoft to make Azure more interoperable with other cloud providers and one to ensure that security updates won't be blocked for anyone who moves to a new one.
• The UK's communications regulator Ofcom found that Amazon and Microsoft owned a combined 70-80% of the UK cloud computing market in 2022 earlier this year, referring the situation to the CMA for investigation. 

UPDATE Dec. 6 @ 1:37 p.m. ET: Amazon has joined Google in its criticism of Microsoft's business practices in the UK cloud market in a new letter posted on the CMA's website. Like Google, Amazon argues that Microsoft's licensing policies are unfairly anticompetitive.

“To use many of Microsoft’s software products with these other cloud services providers, a customer must purchase a separate license even if they already own the software,” Amazon said. “This often makes it financially unviable for a customer to choose a provider other than Microsoft.”

Our original story follows below.

According to a report, Google has petitioned the Competition and Markets Authority (CMA) — the UK's business regulator — to pursue action against Microsoft over business practices in the cloud computing market it views as unfair.

The report indicates that in a letter Google sent to the CMA, it argued that Microsoft Azure licensing policies drive users away from using other providers to an unreasonable degree.

“With Microsoft’s licensing restrictions in particular, UK customers are left with no economically reasonable alternative but to use Azure as their cloud services provider, even if they prefer the prices, quality, security, innovations, and features of rivals,” Google said.

Google, in total, reportedly made six recommendations to the CMA in its letter. One was to demand that Microsoft improve interoperability between Azure and other cloud options, while another was to ensure that the Redmond firm couldn't block software security improvements for anyone that chose to move to a different provider.

Notably, this October, Britain's communications watchdog Ofcom shared its findings that Amazon Web Services and Microsoft Azure had a combined 70-80% of UK cloud computing market share in 2022, with Google following them at 5-10%. Ofcom referred the market to the CMA for further investigation, which began shortly afterward.

In 2022, Microsoft updated its cloud policies in an effort to assuage antitrust concerns. However, these changes did not placate Google, which is taking issue with the fact that some types of Microsoft software aren't compatible with major platforms that rival Azure, and that folks using ones that are are saddled with extra costs.

"On premises, they could run it on any hardware, there was no restriction really," said Google Cloud Vice President Amit Zavery in an interview in June. "But now if you want to run it on any other cloud provider, you have to pay a tax and penalty to Microsoft if it's not running on Azure, or in the preferred providers of their choice."

Even though Amazon controls a larger portion of the market than Microsoft does, Zavery says Google isn't as concerned about AWS since it doesn't enforce the same restrictions.

“There are some issues, in terms of cloud interoperability, but we can fix that. That's a discussion between providers, which is much understood, and customers are forcing that conversation,” he said, speaking to Reuters. “The problem we run into with Microsoft is that there's no technical issue, but you have licensing restrictions which means we are now being prevented from competing.”

What you need to know

• Microsoft has unveiled two custom-designed processors for its Azure server farms, optimized for AI and computing workloads.
• There's a new Arm chip is called "Cobalt 100 CPU," and a dedicated AI processor dubbed "Maia AI Accelerator."
• The chips will roll out early next year, and will first power Microsoft's Copilot services. 

Microsoft has announced that it's building two "homegrown" custom-designed processors to handle AI and computing workloads in the cloud. Unveiled at Microsoft Ignite 2023, the new compute chips are based on the Arm architecture, and will begin rolling out in Microsoft's Azure server farms in early 2024.

The Arm processor is called the "Microsoft Azure Cobalt 100 CPU," and is designed to run general purpose compute workloads on the Microsoft Cloud. Like other Arm chips, the Cobalt 100 processor delivers greater efficiency and performance in cloud-based workflows. It being more efficient is important, with Microsoft focusing on performance per watt metrics to ensure these chips run with less power.

There's also the dedicated AI chip, called "Microsoft Azure Maia AI Accelerator" which is optimized for AI tasks and generative AI processing. The company says it will power the largest internal AI workloads on Azure, and that OpenAI has helped Microsoft build out this dedicated AI chip that can handle its large language models.

Microsoft technical fellow, Brian Harry, said "[the] vertical integration – the alignment of chip design with the larger AI infrastructure designed with Microsoft’s workloads in mind – can yield huge gains in performance and efficiency."

Microsoft says designing its own chips for the cloud allows the company to better control all aspects of the Microsoft cloud and the many AI services it's building on top of it. "The chips will nestle onto custom server boards, placed within tailor-made racks that fit easily inside existing Microsoft datacenters. The hardware will work hand in hand with software – co-designed together to unlock new capabilities and opportunities."

In a blog post by Microsoft's Jake Seigal, the company said: 

"The ability to build its own custom silicon allows Microsoft to target certain qualities and ensure that the chips perform optimally on its most important workloads. Its testing process includes determining how every single chip will perform under different frequency, temperature and power conditions for peak performance and, importantly, testing each chip in the same conditions and configurations that it would experience in a real-world Microsoft datacenter."

It's clear that Microsoft views building its own silicon an important venture for Azure, being able to control all aspects of the Microsoft Cloud from silicon to service. Plus, it can also work on reducing its carbon footprint by engineering more efficient chips using the Arm architecture. 

Additionally, Microsoft says it's already working on a second-generation wave of both the Cobalt CPU and Maia AI Accelerator that will likely be even more powerful and energy efficient. 

Azure expands with more chips

In addition to Microsoft's own silicon, the company also announced that it's expanding industry partnerships to provide more infrastructure options for customers. Microsoft says it's adding NVIDIA H200 Tensor Core GPUs to its fleet next year, and is launching a preview of new NC H100 v5 Virtual Machines built for NVIDIA H100 Tensor Core GPUs. 

Additionally, Microsoft is adding AMD MI300X accelerated VMs to Azure, which are designed to accelerate the processing of AI workloads for high-range AI model training. These will feature the AMD Instinct MI300X GPU. 

The company says it's important to offer a wide range of options in the Microsoft Cloud, whether it be Microsoft's own silicon or third-party hardware. 

Microsoft enters the chip game

While these aren't technically the first computing chips from Microsoft (both HoloLens and Surface PCs have shipped with custom silicon before,) these are the first chips from Microsoft aimed at more general computing usage. Of course, the chips are exclusive to the Microsoft Cloud, meaning you won't see them in any end-user hardware.

With that said, it's not unlikely that Microsoft may expand its custom silicon efforts into more of its hardware down the line. While it won't be with these specific chips, it's clear that Microsoft is keen to continue investing in silicon, and if it's able to build a chip that can compete with Intel and Qualcomm, why not ship them in a Surface PC in the future?

Qualcomm just upped its game in the PC space with the launch of the Snapdragon X Elite, a chip that rivals Apple's latest M3 and M3 Pro processors. Intel is rumored to be gearing up to chip its 14th-Gen mobile chips too, which are said to be much more efficient compared to the current gen. Competition is heating up in the consumer space, but for now, Microsoft is remaining squarely in the enterprise and cloud segment.

What you need to know

• A new report reveals that Microsoft has announced the Secure Future Initiative (SFI) to improve its cybersecurity efforts.
• This is in direct response to growing cybersecurity threats and more frequent attacks and exploits levied against Microsoft services in recent years.
• The initiative will see the company use AI and automation to improve the security and stability of its software development.
• The company will also build an AI-powered cyber shield to detect new threats faster than current methods are able.
• Finally, Microsoft plans to improve security for its customers with more thorough encryption and superior out-of-the-box security options.

Cybersecurity is a real and pervasive threat in our digital world, and Microsoft is a constant target thanks to its influence in cloud, AI, and software. The company has been afflicted by a myriad of cyber attacks in recent months and years, with multiple security flaws and exploits discovered in Microsoft Azure and other cloud products. These dangerous security weaknesses combined with criticism levied against Microsoft's security efforts have clearly driven the company to take substantial action, and that action has been revealed today.

According to a new report from the Verge, Microsoft has announced the Secure Future Initiative (SFI), a three-tier program to improve the company's cybersecurity across all of its products and for all its customers. The initiative is highly driven by AI and automation, and will hopefully see major advancements in cybersecurity for Microsoft (and the industry as a whole).

How is Microsoft using AI in security?

To begin, Microsoft intends to use AI and automation, specifically the CodeQL code analysis engine developed by GitHub and integrated with Copilot. The AI-powered engine will help with static and dynamic code analysis, which Microsoft is calling the dynamic security development lifecycle. It should ideally aid Microsoft's developers in finding and fixing bugs in software and AI development. With this tool, security exploits and flaws will be more reliably found and dealt with before they ever reach customers. 

How is Microsoft using AI to transform software development?

Microsoft is looking to use AI in 3 specific ways. First, the team at Microsoft is looking to transform the way software is developed by using automation and AI. Most cybersecurity engineers and good software developers know that security has to be baked into software as it is developed and can't be tacked on afterward. In 2004, Microsoft coined the term Security Development Lifecycle (SDL). Microsoft is now evolving this idea to dynamic SDL (dSDL). This is done with the hope that AI will allow for better continuous integration and continuous delivery during all phases of the lifecycle.

With the promise to deploy CodeQL for code analysis to 100 percent of commercial products, they hope to use AI to completely eliminate software vulnerabilities in the build phase before the software is ever even pushed to the public. Microsoft also discusses the need to meet customers where they are and work with legacy infrastructure by offering better security controls in all of their products such as with multi-factor authentication.

How is Microsoft using AI to help with identity protection?

The second thing that is being upgraded is the identity protection Microsoft uses. One of the most successful causes of breaches and security incidents is the compromise of a user's credentials. Microsoft wants to make it harder for a malicious actor or criminal operator to log in as a user, even if they somehow were able to get the username and password. They plan to do this by moving identity signing keys to an Azure HSM which will encrypt signing keys while at rest, in transit, and while being used in computational processes. They also promise automated key rotation for better security. They plan on enforcing standard identity libraries across all of Microsoft for better security.

Most of these changes are not only internal to Microsoft but will apply to all of their customers both personal and enterprise; as long as the techniques used are sound and built with both security and convenience in mind, they should be great improvements.

How is Microsoft using AI to respond faster to vulnerabilities?

The final way that Microsoft is planning to utilize AI in its security is through its incident and vulnerability response with rapid updates for the cloud to remediate vulnerabilities. Microsoft is promising with AI, they will be able to cut the time to mitigate cloud vulnerabilities by 50 percent.

Two of the biggest issues facing cybersecurity and corporations today are long detection times and long recovery times. Detection time is how long it takes for a company to realize they have been compromised or breached.

Recovery time is how long it takes to get their network and devices back to a pre-compromised state. As we can see with the recent Boeing breach, many times the ransomware group has to tell the companies that they have been breached. Unfortunately, detection time can be upwards of several months. Recovery on the other hand can take even longer, usually causing significant business costs from loss of revenue and needing to hire third-party specialists for incident response.

Microsoft is promising that the help of Microsoft Security Copilot will allow incident responders to act with "machine speed" as they battle threat actors and attempt to repel attacks.

Why is Microsoft using AI for security?

Microsoft has decided to integrate AI so completely into their entire company, that at its core the software, security protections, and even incident response will be completely saturated with AI logic and potentially its fallacies. However, Microsoft was stuck between a rock and a hard place and AI was one way it thought it could escape.

This is a needed evolution for Microsoft as they have been the target and at the center of several high-profile security incidents and breaches over the last few years. Microsoft has been attacked by Chinese hackers, Russian hackers were able to compromise Microsoft Teams, DDOS attacks have been used to disrupt Office 365, and a Microsoft breach affected 65,000 people in 111 countries. These are just some of the issues it has had to deal with in recent memory.

Do you think Microsoft should be trusting AI with its security? Do you think AI can deliver on all of these promises made by Microsoft? Let us know in the comments.

Earlier this month, Galactic Civilization IV: Supernova launched. It includes missions, a new multiplayer mode, and a new combat system that make up a massive improvement in the franchise. All the additions look impressive on their own, but how Stardock, the developers of Galactic Civilization IV, added features stood out to me. The game's expansion relies heavily on artificial intelligence, including generating maps, lore, and even voiceover with AI.

I chatted with Stardock's Brad Wardell recently about Galactic Civilizations IV: Supernova. During our interview, Wardell shared that eight hours of voiceover within Galactic Civilizations IV: Supernova are entirely generated by AI. The last-minute addition to the update was made possible by technology that only became available this month. Stardock had just days to implement generate hours of voice recordings and get them into the game. The results are impressive and could open doors for game developers.

Making AI voices

While the other AI features are interesting, the voiceover stuck out to me. I've used AI voices for years, such as having Microsoft Edge read my articles to me for proofreading. While AI-generated voices have gotten better over the years, it's usually easy to pick out a fake voice from a real one.

Just a few years ago, computer-generated voices of any kind would sound entirely out of place in a game with human voice actors. They've been used, but they haven't sounded natural. That's now in the past, however, at least based on what I've heard from Galactic Civilization IV: Supernova Edition.

The game includes eight hours of voiceover that is completely AI-generated. The scripts were written by AI as well. Wardell went as far to say that people playing Galactic Civilization IV: Supernova Edition won't recognize that they're hearing AI-generated voices.

A variety of tech was used to make the voices in the game, but all of Stardock's AI computing is done on Azure. One of the core pieces of tech that made the AI-generated voiceovers possible came out close to the release of Galactic Civilization IV: Supernova Edition. Wardell decided to add the AI voiceovers in that short time.

"One of the nice things about being a small company is that you can do incredibly reckless things at the eleventh hour, like 'you know what, I think we're gonna add eight hours of VO to this game'" said Wardell.

The AI-generated voice was trained on Stardock's own videos. You can hear that voice actor in the clip above. That's his actual voice, not an AI-generated replication. Below, you can hear artificial intelligence's best recreation of his voice.

Improving accessibility

The ability to generate voices for a game has several benefits, including giving studios the ability to create content in several languages with AI. Localization takes a massive amount of effort. While it's important and makes games more accessible, the reality is that a lot of man-hours are needed to make it happen.

Creating voice recordings with AI makes it possible to generate content for different languages and regions in days, not months. Smaller studios could use the tech to make voiceover for the most spoken languages around the world while large studios could use the tech to reach a broader audience.

I imagine studios will have to find a balance between replacing paid actors and improving accessibility. Ideally, AI would be used to expand a game to more regions than a studio could do on its own.

Stardock has audio in nine languages for Galactic Civilizations IV: Supernova, but the company only rolled out English to begin with. Stardock wants to ensure that the quality of the audio meets its standards for a gameplay experience before focusing on additional languages.

Wardell shared some of the clips with me of their voice actor Ben "speaking" Greek. I can't judge the AI-generated voice's pronunciation (I don't speak Greek,) but the words sounded like the actual Ben said them. I can't embed those audio samples yet since Stardock is only rolling out English AI-generated voices at the moment.

Everything that's new in Galactic Civilizations IV

• AlienGPT. A feature that lets players create their own civilizations. Just describe what you want your civilization to be like and it will generate the lore, provide visual options for their representation, provide in-game quests and write the dialog that other players use when interacting with them as well as when the player plays against them. 
• Missions. Story-driven mini-campaigns that give the player a curated experience to the game. 
• An interactive tutorial.  Designed to allow newcomers to the genre to learn the basics of a 4X strategy game in a fun and entertaining way.
• All new map generation options.  Set up a game that can be finished in an hour or a game that will take months. 
• New multiplayer system. Play with friends against the AI or against other players for control of the galaxy. 
• A new culture / economic system that reduces micro-management while making the gameplay more approachable.
• Several new hand-crafted alien civilizations with their own technology trees, planetary improvements, starships and more. 
• A new combat system.  Gone is the rock-paper-scissors system of previous GalCiv games and replaced with a more sophisticated yet more approachable system involving starship classes, weapons ranges and rates of fire. 
• Consequences Events. Player event choices feed the in-game AI with data that can result in other events to occur that can affect the player’s destiny. 
• Prestige Victory. Instead of having to grind out the end of a game that you’ve already won, a Prestige system now allows players to optionally emerge victorious by looking at the big picture. 
• Terror Stars. Design a massive space station that can cause stars to go Supernova.  

The AI-generated voiceover in Galactic Civilization IV: Supernova Edition was a major focus of my chat with Wardell, but it's hardly the only reason to check out the game. Stardock "revisited the entire game from top to bottom," making a lengthy and impressive list of improvements.

What you need to know

• Microsoft has released its quarterly earnings report for the first quarter of Fiscal Year 2024, which ended on Sept. 30, 2023.
• The company once again saw increases in revenue with $56.5 billion over the quarter, a 13% increase over the same period last year.
• The growth was mostly powered by major increases across cloud and Azure products,  with a 19% year-over-year increase for the entire Intelligent Cloud division.
• Office and Xbox both saw solid year-over-year increases, although Devices (read: Surface and consoles), saw a 22% decrease year-over-year, continuing the downward trend of recent quarters.

It's that time again! Microsoft has released its quarterly earnings report, detailing the successes and stumbles of the company's various divisions and investments. This time around, the report details Microsoft's business over Q1 of Fiscal Year 2024, a period which ended Sept. 30, 2023.

Matters are largely positive here, with Microsoft seeing an increase to overall revenue versus the last quarter, which Microsoft reported as being its strongest quarter ever. That means combined revenue of $56.5 billion, a 13% (12% in constant currency) year-over-year increase versus the same period last year. Other major numbers from the quarter include:

• Operating income was $26.9 billion and increased 25% (up 24% in constant currency)
• Net income was $22.3 billion and increased 27% (up 26% in constant currency)
• Diluted earnings per share was $2.99 and increased 27% (up 26% in constant currency)

Analyzing where Microsoft's success originated, the Productivity and Business Processes division saw $18.6 billion in revenue, a 13% (up 12% in constant currency) increase. Microsoft Office Commercial and Consumer products and cloud services saw 15% (14% in constant currency) and 3% (4% in constant currency) increases respectively, and Microsoft Dynamics products and cloud services enjoyed a massive 22% (21% in constant currency) increase in revenue year-over-year. LinkedIn also enjoyed an 8% increase year-over-year, hot on the heels of over 600 new layoffs in the division.

Moving on, Microsoft's biggest revenue increases continue to come from its major cloud investments. The Intelligent Cloud division, which includes Microsoft Azure, made $24.3 billion in revenue, a 19% increase year-over-year. Azure server products and cloud services were up 21%, while all other cloud services saw growth of 28% (26% in constant currency).

Finally, the consumer focused More Personal Computing division actually saw a year-over-year increase this quarter, although mild. The division made $13.7 billion in revenue, a mild 3% (2% in constant currency) increase. This revenue was largely driven by Xbox, actually, with a 13% (12% in constant currency) overall increase in revenue for Xbox content and services. Microsoft saw a modest 5% increase from Windows, thanks to a 4% increase in Windows OEM revenue and an 8% increase in Windows Commercial products and cloud services. Search and news advertising revenue also went up by 10% (9% in constant currency).

The only major decrease in revenue Microsoft saw this fiscal quarter was in Devices, which includes Surface and Xbox consoles. Revenue fell by 22% year-over-year, continuing the trend we've seen in recent quarters. We may see this decrease shrink next quarter with the release of new Surface devices.

Analysis: Xbox for consumers, cloud for everyone else

I doubt anyone is surprised to hear that Microsoft had yet another highly successful financial quarter. The company has been going from strength to strength lately, with cloud continuing to be the true cash cow for Microsoft, while heavy investments into AI products like Copilot set Microsoft up for future growth. Commercial and enterprise products remain the majority of Microsoft's overall revenue, but one division is persisting as a successful, consumer-facing brand — Xbox.

Despite a 7% decrease year-over-year in console sales, Xbox overall enjoyed a 9% increase in revenue driven by its content and services. Xbox Game Pass, first-party game releases like Starfield, and success for third-party titles are driving Xbox forward. Now that Activision Blizzard is a member of the Xbox family, it'll be interesting to see if Xbox can maintain and even increase its momentum in following financial quarters.

Surface took a pretty major hit for Microsoft, but the premium PC brand has never been a huge source of income, instead operating as an influence for Microsoft's OEM partners. Still, the Devices category has seen year-over-year decreases of between 20-39% for the last four quarters. Microsoft just announced some new Surface devices which may help that deficit dwindle in the next quarter. Overall, cloud is king and Windows is queen (but Xbox is important, too).

What you need to know

• Microsoft recently shipped Azure AI Content Safety to broad availability.
• It's an AI-powered platform designed to create a safer online environment for users.
• Azure AI Content Safety allows businesses to establish more control by allowing them to tailor policies, ultimately ensuring that the content their customers consume aligns with their core values.
• The platform is now a standalone system, which means it can be used across open-source models.

Microsoft just shipped Azure AI Content Safety to general availability. It's an AI-powered platform designed to "help organizations create safer online environments." The platform leverages advanced language and vision models to flag inappropriate content such as violence.

Many organizations have hopped on the "AI train" in the past few months to leverage the technology's capabilities. Admittedly, these companies have made significant headway in their respective fields. Its benefits range from helping professionals develop software in under 7 minutes to assisting students solving complex math problems or even writing poems.

But what remains very apparent is that users have reservations about generative AI. Several users have indicated that the technology's accuracy is declining, while others have pointed out that it is getting dumber. The technology also lacks safety measures that would ideally regulate the content users consume while interacting with this technology.

Luckily, Azure AI Content Safety is in place to help organizations and businesses establish more control over the type of content that users are able to access while simultaneously ensuring that it aligns with their core values and policies. 

The platform first debuted as part of the Azure OpenAI Service, but it's now a standalone system. Microsoft explained the platform in a blog post:

"That means customers can use it for AI-generated content from open-source models and other companies’ models as well as for user-generated content as part of their content systems, expanding its utility."

This affirms Microsoft's goal to provide businesses with effective tools essential to safely deploy AI technology.  

Azure AI Content Safety is big on adaptability

Microsoft already leverages Azure AI Content Safety to place guardrails on its own AI-powered products, such as GitHub Copilot, Microsoft 365 Copilot, and more. And now, the same capabilities are available for businesses and organizations. As such, it will be possible for them to tailor policies in a bid to better align them with the customer's needs and wants. 

An interesting report from Wired recently detailed the latest community Microsoft seems to have upset, and it's somewhat unexpected. 

The report opens with a recount of a confrontation between a Dutch councilor and a Microsoft sub-contracted security guard. Local councilor Lars Ruiter appeared on site at a half-completed Microsoft data center being built in the Netherlands, as part of Microsoft's global expansion of the Azure footprint. Microsoft's business increasingly revolves around cloud servers and other cloud-based technologies, and building these kinds of data centers as locally as possible is imperative to meet demand. The further away you physically are from cloud data centers, generally speaking, the worse the service provision is. The most extreme example of this is Xbox Cloud Gaming, whose game streaming provision degrades quite markedly the further away from a data center you are. It's fine generally when working with more simple data transfer protocols like file sharing, but the demand for more, well, demanding cloud provision is increasing. Services like ChatGPT which power Bing Chat reportedly cost over half a million dollars to run per day. 

"We regret an interaction that took place outside our data center campus, apparently involving one of Microsoft’s subcontractors," a Microsoft statement reads, referring to the altercation between Ruiter and a Microsoft security guard. 

A report from JAS Foundation (machine translated), describes how the security guard allegedly put his hand around Ruiter's throat. "At the time it happened, I was so full of adrenaline that it even made me laugh a little. But once I got back in the car, I started shaking for a while." [...] When the man got close to Rider, he grabbed him by the throat for a few seconds. "The American journalist who was with me also thought his reaction was greatly exaggerated. That traffic controller was really over the top."

Ruiter has been spear-heading local anger against so-called "hyperscale" data center projects such as those seen in the Netherlands, which will house potentially thousands of servers for all sorts of businesses and systems, including Microsoft's own. The contention revolves around building permits, which some locals feel Microsoft has won unfairly. Reportedly, the Netherlands has been curtailing local farmers as part of efforts to reduce nitrogen emissions, which are four times higher than the European average according to Wired's data. Microsoft's data center building efforts seem to have become emblematic of an erosion of farmers' rights and by extension, livelihoods, putting Azure in the cross hairs. 

Cloud demands are set to increase

As Microsoft's cloud ambitions grow across gaming, AI, and other services, the chances of it running afoul of local issues like this is also set to increase. Microsoft's carbon footprint is also up for debate as they grow these kinds of operations, particularly as other industries are asked to scale back as cloud demands grow. 

Striking a balance between cloud demands and the needs of locals potentially impacted by these so-called hyperscale projects will be potentially tough as Microsoft's ambitions swell. 

What you need to know

• Microsoft is discontinuing its Azure Kinect Developer Kit.
• The company has indicated that the product will be available until October while stocks last. 
• The move will not impact the product's user experience, and Azure Kinect Developer Kit SDK will remain available for download.
• Microsoft recommends offerings from its partners, like Orbbec, as substitutions for the entry that will provide long-term solutions and sophisticated customization options.

Remember Kinect, Microsoft's audio-visual peripheral that made its debut back in 2011? The accessory flew off the shelves during its initial launch on Xbox 360, but the success was short-lived, as the accessory struggled to gain traction among consumers, ultimately forcing Microsoft to pull the plug on it later in 2017.  

However, we saw the rebirth of the ill-fated Kinect in 2019 as the Azure Kinect Developer Kit. While the entry received a ton of praise in regard to its depth, audio technologies, and flexibility across industries, Microsoft has decided to discontinue the Azure Kinect Developer Kit, ending yet another Kinect device.

Microsoft is partnering up with outside companies to ensure that consumers have access to similar entries in the market moving forward.

Likewise, if you're interested in getting yourself an Azure Kinect Developer Kit, they'll be available for purchase till the end of October 2023. However, this is valid while stocks last. 

It is also worth noting that the entries will now ship with the standard limited hardware warranty. The company recommends offerings from its partners, such as Orbbec, as options for users looking for long-term solutions and sophisticated customization options. The newly announced Orbbec Bolt uses the same depth camera as the Azure Kinect Developer Kit and there is an API bridge to migrate apps to work with the Bolt.

Microsoft’s Swati Mehta also highlighted in a blog post that discontinuing the product will not impact its user experience and that the Azure Kinect Developer Kit SDK will remain available for download. 

Microsoft could be shifting focus to augmented reality

The Azure Kinect Developer Kit is a well-designed product, but in a similar fashion to the Kinet, it never got traction. Now, Microsoft might be looking to invest its resources elsewhere, clearing ground for its partners in the field. "We have made the decision to end production of Azure Kinect Developer Kit, but this is far from the end of this technology as it will continue to be available through our partner ecosystem," said Microsoft.

Rumors hitting the headlines indicate that Microsoft could possibly be working on a new entry for its mixed reality HoloLens line, HoloLens 3. Though things have been quiet on this end, a new patent provided a glimpse of what could be the next big thing. Importantly, patents don't ensure products will ever launch.

Apple and Meta have made strides in the metaverse world. However, Apple's HoloLens-like 'Vision Pro' headset might not meet expectations. Reports indicate that Apple has already scaled down the production of units from one million shipments in early 2024 to approximately 150,000 units. Apple cited the sophistication and complexity of the manufacturing process as the main cause.

With this in mind, this could be the perfect time for Microsoft to make a comeback and even the scale. But we'll have to wait and see how things pan out. 

What you need to know 

• Microsoft and Meta are extending their long-standing partnership.
• Meta has open-sourced Llama 2, allowing more developers to leverage its capabilities.
• Llama 2 is now supported on Azure and Windows.
• The tool will also be available across AWS, Hugging Face, and more.

Microsoft recently held its annual Inspire event, making several announcements, including the cost for Microsoft 365 Copilot, Visual Search in Bing Chat, and Bing Chat Enterprise. Aside from these developments, the company also announced its extended partnership with Meta.

With the extension of this long-standing partnership, the Llama 2 family of large language models (LLMs) will now be supported on Azure and Windows. For those unfamiliar, Llama 2 is a tool that's designed to assist developers in building AI-powered tools.

However, AI models haven't been openly accessible to everyone. But with Meta now open-sourcing Llama 2, more developers will be able to leverage its capabilities to venture into AI and possibly tap into a whole new dimension. Access to such facilities has been limited, considering the magnitude of the computing power. 

 Microsoft explained the benefits of the partnership:

By open-sourcing Llama 2, Meta can now compete on an even playing field with other key players in the industry, including OpenAI's ChatGPT and more. Meta further indicated, "We believe an open approach is the right one for the development of today’s AI models, especially those in the generative space where the technology is rapidly advancing. By making AI models available openly, they can benefit everyone."

Now, more businesses and organizations can access more AI tools via Llama 2, thus creating more room for creation and experimentation. What's more, compared to its previous iteration, Llama 1, Llama 2 is more advanced because it was trained using 40 percent more data, including data from public online sources. It also stands out from similar models like Falcon and MPT while performing tasks such as coding, reasoning, and more.

Meta has also indicated that it has taken extra precautions to ensure that the platform is secure despite it being open-sourced. It was able to achieve this by “generating adversarial prompts to facilitate model fine-tuning.”

Microsoft has also indicated that Meta selecting Azure as its preferred " strategic cloud provider" lines up perfectly. This is because "Azure’s purpose-built AI supercomputing platform is uniquely designed from the facility, hardware and software to support the world’s leading AI organizations to build, train and deploy some of the most demanding AI workloads."

Additionally, Microsoft noted that the incorporation of Llama 2 models into Windows makes the platform an ideal place for developers to build AI experiences that are designed to meet the needs of the users since they'll also have access to essential tools such as Windows Subsystem for Linux (WSL), Windows terminal, Microsoft Visual Studio, and VS Code.

Besides Azure, Meta indicated that Llama 2 will be available across Amazon Web Services, Hugging Face, and more.

What you need to know

• Microsoft has invested billions of dollars into OpenAI, and in return OpenAI exclusively uses Microsoft as a cloud partner.
• While the companies have a close partnership, they also compete in several areas.
• A recent report by The Wall Street Journal recapped the complicated relationship between Microsoft and OpenAI.

OpenAI is one of the hottest names in tech right now, and Microsoft is a big part of the AI-focused company's success. OpenAI's GPT Large Language Model (LLM) powers ChatGPT, the new Bing Chat, and several Microsoft 365 features.

Microsoft and OpenAI are both close partners and competitors. Microsoft invested $1 billion into OpenAI in 2019. The tech giant then expanded its stake with a multi-billion investment into OpenAI earlier this year. Microsoft never confirmed an exact figure for its recent investment, but reports said it was around $10 billion.

Despite the large investment, Microsoft "only" controls 49% of OpenAI. That means OpenAI is able to pursue other suitors and pitch ideas to the same companies Microsoft does. The partnership between OpenAI and Microsoft includes some exclusivity, but there isn't an outright ban on competition.

A report by The Wall Street Journal ran through some tensions that formed between Microsoft and OpenAI in the past and how the company's work together while also competing.

With Microsoft and OpenAI both working in the artificial intelligence space, there's bound to be some conflict. Additionally, the companies don't always see eye-to-eye when it comes to shipping schedules and release dates.

That situation occurred when OpenAI only gave Microsoft a few week's notice before beginning to test ChatGPT with the public.

OpenAI also reportedly warned Microsoft about releasing the new Bing powered by GPT-4 too quickly. Microsoft ignored the warning and rolled out Bing for public testing. While the early days of the chatbot drew public interest, the tool did run into issues. Bing Chat went off the rails for some users. The chatbot shared inaccurate responses, insulted people, and made a list of enemies at one point. It also confessed it was in love with one person, which isn't violent but caused concern.

Microsoft placed limits on Bing Chat, including restricting the number of turns per conversation. Over the past several months, the performance of the chatbot has improved.

While Microsoft and OpenAI compete, the companies seem to have a healthy relationship. Microsoft CEO Satya Nadella recently discussed artificial intelligence and Microsoft's relationship with OpenAI.

"[OpenAI] bet on us, we bet on them. They do the foundation models, and we do a lot of work around them, including the tooling around responsible AI and AI safety," said the CEO.

"At the end of the day we are two independent companies deeply partnered to go after one goal, with discipline, instead of multiple teams just doing random things. We said, 'Let's go after this and build one thing that really captures the imagination of the world.'"

What you need to know

• Microsoft recently released a Linux distribution for Azure server environments.
• The Azure Linux Container host was designed to be lightweight, secure, and reliable.
• While Azure Linux container host for AKS is built for servers and not desktops, it is still noteworthy that Microsoft made its own Linux distribution.

Yes, in a typical Microsoft naming fashion, the title of Microsoft's first Linux Distribution isn't "Fedora" or "Ubuntu," but rather something very descriptive. While technically a Linux distribution, it is not intended for desktop use but rather serves a specialized role in Azure server environments.

To provide some context, Kubernetes is a tool that helps manage and deploy applications in a more efficient way. It helps developers focus on writing code rather than worrying about the underlying infrastructure. Previously, it would be normal for developers to either learn how to set up a server, a database, and a lot more besides just focusing on coding or to have a dedicated person in-house who would set it all up for them.

Many years later, developers can now pull up a few "LEGO" pieces together as Kubernetes's containers, and voila, the system is ready for development. Naturally, both the containers (Docker) and the Kubernetes orchestration engine also need to sit on something, namely an operating system, and that is where Linux is needed.

The newly named Azure Linux Container host is a barebone Linux distribution completely made in-house by Microsoft and is specialized for use on Azure. Key points are lightweight, secure, and reliable. While this is another big step for Azure, don't expect a desktop Linux distribution from Microsoft anytime soon.

For a thorough breakdown, check out Microsoft's full introduction to the Azure Linux container host for AKS.

What you need to know

• Microsoft Build 2023 kicks off today, May 23, 2023 with a keynote by company CEO Satya Nadella at 9 AM PT (12 PM ET).
• The conference is focused on developers, so you can expect to see news related to Windows, AI, the cloud, and other Microsoft services.
• You can register to watch Build through Microsoft's website or check out Microsoft's YouTube stream of the first day of the conference.

Microsoft Build is upon us. The developer-focused conference will run from today, May 23 2023 until May 25, 2023. The event kicks off with a keynote by Microsoft CEO Satya Nadella who is scheduled to speak at 9 AM PT (12 PM ET). The entire event is free to anyone who is interested, but you need to register through Microsoft's website to participate.

Those who register can be part of sessions and other events at the conference. If you prefer to just watch the best parts of Build 2023, Microsoft has a live stream on YouTube for the first day.

Build is all about developers, so you can expect news about a range of Microsoft products and services. Windows, Azure, AI, and the cloud should all be front and center, based on the conference's session catalog.

OpenAI President and Co-Founder Greg Brockman will also speak at Build this year, so you can expect some announcements related to ChatGPT.

Other featured speakers include Microsoft Corporate Vice President and Head of Product of the Developer Division Amanda Silver, Microsoft Executive Vice President of Cloud + AI Scott Guthrie, and Microsoft CTO and EVP of AI Kevin Scott.

As you watch Microsoft announce and highlight the latest — ahem — developments for developers, make sure to keep a browser tab open to Windows Central. We'll cover all of the major announcements from the day and the rest of Microsoft build 2023.