Microsoft CEO Satya Nadella warned that AI must demonstrate real‑world value or risk losing public support. His comments came amid mounting community backlash over the technology’s heavy demand for electricity and cooling water to power data centers, although Microsoft and NVIDIA have seemingly found a fix.

Speaking to The Wall Street Journal recently, Nadella echoed his earlier stance, stressing that leading players in the AI industry must advance the technology in ways that deliver the greatest public benefit.

There’s growing concern around AI, particularly when it comes to security, privacy, and even its impact on jobs. "You can't say, hey, all white-collar jobs are gone and this could even be a weapon, and we will use all the power to build data centers," Microsoft CEO Satya Nadella noted.

Perhaps more interestingly, the executive called out key investors in the AI landscape who see the technology primarily as a tool to cut jobs and reduce operational costs. He indicated that this would be the wrong way to look at the technology.

Instead, he recommended that AI should be viewed as a tool designed to help skilled workers better leverage their capabilities. He further painted a picture where AI tools and human capital co-exist in the same space, a phenomenon he referred to as "token capital."

While the executive claimed that it'd be a recipe for how companies can leverage both AI and workers simultaneously, he admitted that: "it's a lot of change management, it's a lot of displacement, but there is a path."

Nadella indicated that leveraging AI and humans at the same time at work can create a "continuous learning system." He indicated that companies in the future could be characterized by the "tacit knowledge that they contain from both sources."

The executive acknowledged that the idea might face public resistance but emphasized that it would be up to corporations to convince people of the economic opportunities AI could unlock in the future.

Over the past few years, key investors and leaders in the AI landscape have shared several theories, highlighting how the technology could reshape work. Last year, Anthropic CEO Dario Amodei claimed that AI was on the verge of slashing up to 50% of entry-level white-collar jobs, making it harder for the next generation to enter the job market.

Interestingly, Microsoft's AI CEO, Mustafa Suleyman, recently cleared up the intent of his statement that AI would eliminate white‑collar jobs in less than 18 months.

The executive indicated that his statement was widely misconstrued. Rather than replacing humans entirely from work, he indicated that AI would be used to augment repetitive and mundane tasks.

At the same time, Microsoft CEO Satya Nadella wants AI agents to be treated like human employees. It'll be interesting to see how AI is adopted in the workplace, and whether organizations choose to view the technology as a supplement rather than a replacement for the workforce.

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It's no secret that Microsoft has heavily integrated generative AI across its tech stack following its multi-billion-dollar partnership with OpenAI. Even Microsoft CEO Satya Nadella revealed that the company writes up to 30% of its code using the technology.

In a recent interview at The New York Times' "Hard Fork" podcast, co-host Casey Newton asked Satya Nadella how much tokenmaxxing is happening at Microsoft (via Business Insider).

For context, tokenmaxxing refers to a workplace phenomenon where productivity is measured by the number of tokens processed, particularly in tasks involving artificial intelligence.

In response to the question, the executive indicated that the company indulges in "a lot" of tokenmaxxing.

This development follows Microsoft’s announcement that all employee Claude Code licenses will be terminated effective June 30, as the company accelerates its transition to GitHub Copilot CLI.

Several reports suggest the push may have a financial motive, given that Microsoft’s fiscal year ends on June 30. The company could be encouraging employees to adopt its in-house offering to reduce operational costs.

While the company has been outright championing the incorporation of AI into the employees' workforce, the bills are piling up quickly. In case you missed it, a mysterious corporation blew $500 million in a single month on Claude AI after forgetting to set usage limits for Claude licenses for employees.

Interestingly, Microsoft CEO Satya Nadella didn't categorically indicate that the company was capping employees' AI usage. Instead, he revealed that the staffers are encouraged to use the right model for the job.

Nadella did not say Microsoft is limiting employees' AI use, but he said workers should use the right model for the job. "Don't use frontier models for non-frontier problems," the executive added.

He pointed to Microsoft Copilot’s Auto Mode as the ideal tool for this scenario, since it automatically selects the model best suited for the specific task at hand. "Let's kind of match these things such that you get the outputs, you get the economics; it can't be a race to doing things that just don't add value."

As it happens, Microsoft is reportedly limiting the use of Claude Fable 5 because of Anthropic's new data retention requirements, citing data protection concerns.

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Where exactly does artificial intelligence fit in the future? There have been many reports suggesting that the technology could eventually replace human beings. Microsoft co-founder Bill Gates reiterated the same sentiments. However, he claimed that energy experts, biologists, and coders would survive the AI revolution.

Microsoft's AI CEO, Mustafa Suleyman, also recently indicated that the technology could potentially wipe out white-collar jobs in the next 18 months. In a recent episode of the "Possible Podcast" with Reid Hoffman, Microsoft CEO Satya Nadella indicated that AI agents should be treated like employees as the technology gains broad adoption worldwide and across organizations (via Business Insider).

This news comes as the tech giant is seemingly pivoting from Bill Gates' software factory vision and doubling down on security, quality, and AI transformation as its core business priorities. Recently, at Microsoft's annual Build conference, Nadella unveiled Project Solara, an OS designed to be invisible, hosting an Agent Shell that can dynamically load and tailor multiple cloud-based agents.

The executive indicated that AI agents are evolving beyond just mere AI assistants. "There's a real platform shift," Nadella indicated. "We're moving from building operating systems and devices for apps to agents."

The transition from human employees to AI agents isn't an easy feat. The executive revealed that he uses 100 AI coding agents, but managing to guide them through a chat interface is an uphill task. "The cognitive load on me managing this is so high," Nadella added.

It's no secret that Microsoft AI CEO Mustafa Suleyman has always viewed Copilot as more than a tool, but a friend and companion. "Copilot will certainly have a kind of permanent identity, a presence, and it will have a room that it lives in, and it will age," he added. It seems that AI agents are getting similar treatment, but it's one that's specifically curated for the corporate world.

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Gigantic "Big Tech" corporations across the world, such as Amazon, Google, and Microsoft, are investing billions of dollars into artificial intelligence, building sophisticated infrastructure and data centers to support the development of advanced models.

However, the construction of these data centers has been received with mixed feelings. On one hand, it will create job opportunities, improve infrastructure, increase tax revenues, and provide better internet connectivity for the community.

But more concerningly, its setbacks are alarming, including increased pollution, gentrification, higher electricity bills, and decreased access to water. Microsoft CEO Satya Nadella addressed some of these concerns during his keynote at the company's just-concluded annual developer-centric event, Build 2026 (via Business Insider).

As part of Microsoft's broader plan to go carbon-negative by 2030 and remove more carbon dioxide from our atmosphere than it produces, the software giant also promised to replenish more water than it uses. But a separate report suggested that Microsoft is internally projecting its water requirements could double by 2030 as it continues to navigate the ever-elusive and evolving artificial intelligence landscape.

For context, Microsoft's Azure cloud business features approximately 500 data centers across 80 regions, which CEO Satya Nadella described as the "most expansive hyperscaler footprint out there." As Microsoft transitions from Bill Gates' software factory vision to double down on AI, the executive admitted that the company has expanded its data center capacity in the past 18 months more than in the first decade of Azure.

"Only when we live up to these principles, do the hard work around it, is when we earn the permission to go ahead and innovate and build," Nadella said.

Data centers generally require a gigantic amount of water for cooling, which has raised concerns among communities where these companies want to set up base for these facilities. Interestingly, Satya Nadella revealed that the company uses a liquid loop in its data centers, which is filled once. This means that, in theory, these facilities can now operate with much lower water consumption.

Microsoft has been exploring full immersion cooling from as early as 2023, which is designed to ensure servers run smoothly without worrying that the chips could overheat.

Water isn't the only major concern around the development of these facilities in the community. In 2024, a damnin report suggested that Microsoft and Google's electricity consumption surpasses the power usage of over 100 countries.

In May, Microsoft's $1 billion data center in my home country, Kenya, was placed on hold after the government failed to commit to paying for the annual capacity ‌Microsoft had requested to run Azure in the region. President William Ruto indicated that the project's power requirements would need to "switch off half the country" to keep the facility running.

Earlier this year, Microsoft President Brad Smith highlighted the company's efforts to build "Community-First" AI infrastructure, which addresses some of the issues raised by communities themselves, including reducing its water consumption and promising not to increase electricity bills. Whether these efforts will translate to a renewed perspective on data centers among regular people remains to be seen.

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Yesterday, Microsoft CEO Satya Nadella took the stand in US District Court in Oakland, California, where he testified about his relationship with Elon Musk, Microsoft's partnership with OpenAI, and more. The executive indicated that he has never received a clear explanation from the company's board of directors why Sam Altman was briefly ousted as OpenAI CEO.

At the time, reports emerged suggesting that Satya Nadella was blindsided by the move. He further revealed that he wasn't told about the decision to fire Altman in advance, and was only pulled out of a meeting and informed about the ouster after the fact.

The board members had revealed that Altman wasn’t consistently candid with his leadership, operations, and efforts (via CNBC). However, Satya Nadella dismissed these claims, suggesting that there was more than meets the eye, further indicating that “[t]here may have been some jealousy … coming through.” — “It was sort of amateur city, as far as I’m concerned,” Nadella added.

Elon Musk has accused OpenAI, Sam Altman, and Greg Brockman of defrauding him out of billions of dollars that he invested in OpenAI using a fake humanitarian mission. He also added Microsoft to the fold, claiming that the tech giant helped Altman and Brockman defraud him.

Interestingly, Nadella testified that Elon Musk never reached out about issues with Microsoft's deal with OpenAI, although they have each other's phone numbers. He even showed the jurors an email Musk had sent him, thanking him for financial and computing support for OpenAI in 2016: "Very much appreciated," Musk indicated in the email. "Will make sure that people know about Microsoft's help."

Satya Nadella indicated that Elon Musk didn't raise any issues when the company initially made a $1 billion investment in OpenAI in 2019. Similarly, he remained quiet when the news broke that Microsoft's investment stake in OpenAI had risen to $10 billion.

Nadella indicated that he was “very proud” that Microsoft took the risk to invest in OpenAI when “no one else was willing” to bet on the ever-evolving technology and OpenAI. The Microsoft executive further revealed that the company took a $15 million loss by letting OpenAI use Azure at a discount to power ChatGPT.

With this in mind, Nadella's testimony in the ongoing Musk v. Altman trial, the billionaire only began complaining about Microsoft and OpenAI's partnership after he filed the 2024 lawsuit. This also seemingly supports the theory and speculation that Musk is a sore loser, as he tries to compete against ChatGPT with Grok.

Nadella was also questioned about his "It wouldn't matter if OpenAI disappeared tomorrow" remark amid tension between Microsoft and OpenAI. "We have the data, IP rights, and all the capability." —"We are below them, above them, around them," Nadella added.

The statement was viewed as "a new war slogan" by some of the executive's fans. While this might be used by Musk's legal team to support his premise about donating $38 million to a charitable cause, only for OpenAI to evolve into a for-profit venture, abandoning its founding mission.

While on the stand, Nadella indicated that he used the statement to calm concerns about Altman's sudden ouster as CEO. "It goes back to me trying to communicate as clearly as possible to customers that they can count on us," Nadella indicated, suggesting that Copilot and other OpenAI products would continue, regardless of OpenAI's situation. We'll see.

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Microsoft has ramped up its efforts in the generative AI space over the past few years, especially after making its first investment in OpenAI back in 2019. While AI seems like the hot thing in tech right now, it's unclear whether the software giant's deep integration of Copilot across its tech stack is actually paying off.

And now, a new report by Bloomberg suggests 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 context, 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.

Earlier this year, Microsoft announced its financial earnings report for FY26 Q2, reporting $81.3 billion in revenue (up 17% YoY) and $38.3 billion in operating income (up 21% YoY). While these numbers might seem impressive, investors have raised concerns about the software giant's spending on data centers and AI infrastructure.

Microsoft CEO Satya Nadella indicated that the company's AI spending is actually paying off, further revealing that Copilot's daily user base has grown “nearly 3x year-over-year.” However, only 3.3% of Microsoft 365 and Office 365 users who interact with Copilot actually pay for it.

The tech giant could be setting itself up for failure with its heavy investment in AI, as investor interest is waning, and they become hesitant to commit funds to Microsoft’s exorbitant AI initiatives.

Some have openly voiced concerns that AI startups like OpenAI and Anthropic are developing agents that could one day replace established productivity suites such as Microsoft 365.

Speaking to Bloomberg, Jonathan Cofsky of Janus Henderson suggested that "rather than paying Microsoft, more customers may choose to go directly to AI vendors."

Is Microsoft playing the long game in AI?

While Microsoft's exorbitant spending on AI isn't exactly paying off right now, Wall Street analysts are seemingly optimistic that the company's strategy will pay off in the long-term.

Jake Seltz, a portfolio manager at Allspring Global Investments, indicated:

“I think the stock has a lot of long-term value. Its AI strategy will ultimately be vindicated, and I think it is largely insulated from the biggest AI disruption fears. In the meantime, those concerns are creating an opportunity, especially if you’re willing to have some patience.”

Interestingly, Microsoft CEO Satya Nadella recently indicated that AI must prove its worth in the real world, or big tech could lose public support and social permission to burn electricity unless it offers something useful.

Right now, the tech giant is seemingly reevaluating its AI strategy, well, at least in its offerings like Windows 11, by reducing where Copilot and AI experiences appear, like those integrations found in Notepad and Paint.

Do you think Microsoft's heavy investment in AI will eventually pay off? Share your thoughts with me in the comments.

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Lindsay-Rae McIntyre, Microsoft's Chief Diversity Officer, is set to leave the company on March 31, 2026. She's leaving the company to take on a new role as a chief people officer elsewhere, starting next month.

McIntyre will be replaced by Leslie Lawson Sims under a new title, Microsoft VP of People & Culture, and will be responsible for "accelerating the people team and shaping culture across the enterprise" (via Business Insider).

Amy Coleman, who became Microsoft's Chief People Officer in March 2025, indicated that: "We're in a time when technology, the way we work, and our org structures are all evolving. The pace of change is exceeding what our current operating model and decision rhythms were built for. We're no longer being asked to scale for stability; we need to scale for adaptability and help set a new pace."

Coleman is also responsible for Microsoft's 3-day return-to-office (RTO) plan for employees working within 50 miles of a Microsoft office late last month. While the reasoning behind this move was that employees tend to work best when collaborating in person, it's making traffic in Seattle unbearable during rush hours.

Interestingly, the major changes in Microsoft's HR department come as the company strives to keep up with the AI hype, especially in terms of funding and development of products.

Coleman indicated that Microsoft is going through an "AI transformation." However, it's unclear how the company's AI efforts are related to its HR department.

While speaking to Windows Central, a Microsoft spokesperson indicated:

“As technology and the way we work at Microsoft continue to evolve, we are transforming our people function so Microsoft remains a place where our employees can do their best work. The organizational updates we are making today align closely to our business priorities, and help us work more closely across teams, move faster, and simplify how we operate in support of our employees and customers.”

However, the company declined to comment on how AI is being leveraged within HR specifically.

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Generative AI has transformed nearly every aspect of our lives — for better or for worse. On the bright side, it’s driving breakthroughs in medicine and reshaping education. Yet it also raises serious concerns, from job security to existential risks.

Last year, Microsoft co-founder Bill Gates suggested that AI could replace humans for most things. More recently, on the OMR Podcast, CEO Satya Nadella warned that AI-driven workforce displacement is imminent, emphasizing that those who fail to adopt the technology risk being left behind.

One thing is clear: Big tech isn’t backing down, even as investors question the billions poured into AI with no clear path to profitability and claims that progress has plateaued.

“I’m not saying there is not going to be displacement," added Nadella. "We have to be clear-eyed about it." Interestingly, the executive indicated that anyone can be a software developer right now thanks to AI.

AI has undoubtedly caused a paradigm shift in the software development space, with new practices like "vibe coding" gaining broad adoption, allowing practically anyone to build apps using basic prompts and some quality control.

Nadella agrees, saying AI has significantly lowered the barriers to entry in software development and even bolstered what a skilled worker can deliver in the space. However, the executive says this doesn't mean anyone can just walk into an engineering or development job.

Interestingly, the executive highlighted the importance of "re-skilling ourselves" to keep up with the impact of AI on the job market.

💬 Do you think AI skills are essential in today's job market?

Nadella likened today’s AI era to the personal computer revolution of the early 1980s, a shift few anticipated would see billions of people and organizations adopting PCs to boost productivity, effectiveness, and efficiency: “The best protection against displacement is to understand the new medium, the new tool, the new skills required — and transform yourself,” he concluded.

In February, Microsoft AI CEO Mustafa Suleyman claimed that AI would automate "most, if not all" white-collar jobs within 18 months:

Elsewhere, a new research paper concerningly suggests that AI use at work could potentially lead to "brain fry," impacting the output of high performers in your organization (via Futurism).

Plus, a study by Microsoft suggests that excessive use of AI tools like Copilot can atrophy critical thinking and even impair your mental faculties. A separate study by MIT Media Lab and OpenAI suggests that users who are overly reliant on ChatGPT are more likely to experience episodes of loneliness. With these, it's easy to see how negative perception can grow.

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In an exclusive here at Windows Central, we now know what Microsoft CEO Satya Nadella and new Xbox CEO Asha Sharma said when addressing Xbox staff during an internal Q&A about Microsoft’s vision for gaming.

There is a lot to unpack from our Executive Editor Jez Corden's report, but I’ll do my best to break down some of the biggest takeaways as clearly and concisely as possible.

Gaming as one of Microsoft’s core identities.

In the internal Q&A at Xbox, Satya Nadella sat down with Xbox’s new CEO, Asha Sharma. Unlike his usual attire, Satya was wearing an Xbox branded hoodie, and described gaming as one of the core identities at Microsoft.

It is refreshing to see Satya acknowledge the importance of Xbox and how central it is as a consumer-facing product for Microsoft. It is something many fans, myself included, have felt the company did not always fully recognize.

Satya takes the point further, joking that if it were not for gaming itself, NVIDIA might not exist. It is something he says he often jokes about with Jensen Huang.

“The trickle from that excellence to the rest of the company becomes straightforward. I joke with [NVIDIA CEO] Jensen Huang, if it wasn't for gaming, [NVIDIA] wouldn't exist. Think about it, without DirectX, I don't think the entire GPU revolution, or the acceleration would've happened.”

The wider Q&A reads like Satya stepping in to reassure the Xbox team. He acknowledges the company’s legacy and recent missteps, even noting he sees the backlash online, while reinforcing that gaming is more than just a consumer product for Microsoft.

It is also worth noting that a recent claim circulating online that Satya Nadella had given Asha Sharma a “blank check” to fix Xbox is not accurate.

Microsoft’s lead communications chief, Frank Shaw, responded to the claim on X and pushed back directly, stating:

“This: Asha Sharma has my full trust and has A BLANK CHECK to revive Xbox and the trust of the fans, no matter the cost.” was not said.”

🗨️ Are you satisfied with Satya Nadella's comments during the internal Q&A at Xbox?

Microsoft’s leadership is putting real weight behind gaming, and Satya Nadella’s “long on gaming” message adds another layer to the company’s long‑term strategy. Xbox’s role inside Microsoft continues to evolve, and this latest discussion highlights how central the platform has become.

What do you think this renewed focus means for Xbox and the wider gaming ecosystem? Share your thoughts below and tell us where you see Microsoft’s gaming ambitions heading next.

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This past month, long-time Microsoft veteran and Xbox lead Phil Spencer retired, giving the floor to incoming CEO Asha Sharma.

Xbox stands at a bit of a cross roads. The Xbox brand has been under strain to some degree, owing to the decision to divest Xbox of its exclusive content to PlayStation, chiefly icons like Halo, Gears of War, Forza, and soon Fable. The decision has left people wondering if Microsoft is actually truly interested in maintaining Xbox as a brand long term, myself included, since without exclusive content it doesn't seem like Xbox has a unique selling point required for its long term future.

Microsoft responded with a big partnership with AMD for an Xbox-Windows hybrid console, that will play not only Xbox console games but also full PC games from the open Windows marketplace. Xbox's Project Helix is on the horizon, and from speaking to various staffers, the general mood at Xbox couldn't be more energizing.

This past week, incoming CEO Asha Sharma was joined by Microsoft top CEO Satya Nadella in an internal Q&A to discuss Microsoft's top-down vision for gaming. Donned with an Xbox hoodie, it was honestly refreshing to hear Satya Nadella speak so positively on the Xbox division. We verified the transcript of the Q&A with multiple sources. Here's what was said.

Asha Sharma introduced Satya Nadella, who remarked about his happiness to be there. He also noted how when he initially came on as Microsoft CEO, there were similar doubts about his knowledge on cloud and infrastructure — before he led Microsoft towards being a global leader in the space. He also noted that gaming remains one of Microsoft's biggest capital investments, representing a long-term view of its role within Microsoft.

"There are core identities in this company. I don't think Microsoft will exist without these identities continuing to thrive. We're a platform company, a developer company. Being a knowledge worker company, and gaming. These are the main identities of what Microsoft has always meant, and will always mean. Therefore, we need to take that — we don't take it for granted. We need to renew it. I'm really thankful to Matt [Booty] and Phil [Spencer] and Sarah [Bond], and all of you who have built this franchise into its 25th year."

Sharma thanked Satya for the opportunity, and noted Xbox's uniqueness. She hailed the Xbox team, calling them "incredible," noting that that over 10% of the Xbox team had been there for over twenty years. She said it emphasized Microsoft's long-term mindset, reiterating Nadella's comments on being "long on gaming," and asked him to elaborate on that point.

"Frankly this applies to anything that we do. We should be in the core of what we do here for gaming's sake. It's not about anything other than being just an excellent company, and an excellent steward for what it means to produce great games, produce great systems and hardware."

Nadella emphasized gaming's legacy and influence on Microsoft and the wider technology stack, talking up how gaming has served as an accelerator for cloud, Windows, the GPU-based server tech revolution, and beyond. But he also said that doesn't mean moving away from what people expect of gaming, and explained why Microsoft will "always" continue to invest in gaming.

"The trickle from that excellence to the rest of the company becomes straight forward. I joke with [NVIDIA CEO] Jensen Huang, if it wasn't for gaming [NVIDIA] wouldn't exist. Think about it, without DirectX, I don't think the entire GPU revolution, or the acceleration would've happened."

"That's why I'm long on it. Phil, he's always talked to me about how gaming is the largest entertainment category — what is gaming in its most expansive form going forward? This doesn't mean we walk away from people are doing today — when we think about a AAA game on a console. The question is about where else can we go to extend that. For me, we're long on gaming. We'll continue to invest, and we'll always do so. It's up to this team to show an excellence in execution, and creativity. Software always carries risk, but this is software with lots of creation risk. It's way different. But yet, we have to be the best-in-class at it."

Xbox CEO Asha Sharma discussed the time she'd been spending with Xbox's different teams, and talked about Microsoft's long-term legacy as a software company "factory" historically, emphasizing that great games can't be "manufactured" in this way, but instead need to be "crafted" by humans. "I'm spending a lot of time thinking about how I can empower these worlds, these stories, and these characters," she said, asking Satya Nadella for his thoughts on Microsoft's responsibility as a company to protect the Xbox fanbase.

"The storytelling," Satya began, "why do we love games? They tell the stories, the mythologies that make us who we are. Getting down to that core, the craft that goes with it, this is the place where we have to get the cultural zeitgeist and then have it manifest in everything that we do. In the games, in the marketing approach, everything that we do in this brand represents that."

Nadella said he hoped other parts of Microsoft could eventually learn from Xbox, he said Xbox "at its best lifts the entire company," owing to its consumer-facing nature. He told anecdotes about how some of Microsoft's bread-and-butter high-powered enterprise customers often want to meet him specifically because they're Xbox customers at home, not just because they're in enterprise. Gaming "emotionally touches us," he said, saying he wants that aspect of Microsoft to exist "always."

Xbox CEO Asha Sharma acknowledged Xbox's difficulties as of late, saying that gaming had been in a transition phase. She said "everything is being relitigated" in regards to Xbox's strategy, echoing our recent interview with Asha Sharma, where she said that she's investigating some of Xbox's decisions over the past year. They discussed where gaming will go over the next phase of its life, but Satya Nadella cautioned that Xbox can't lose sight of what it already has.

"We have to make sure that the friends we have today, are the friends that you have tomorrow," Satya said of Xbox's existing customers. "You want to wake up feeling like your friendship has even grown stronger. We have to really make sure, whether it's console, whether it's PC, whether it's the lover of Forza, Halo, we really want to make sure they love us for what they expect us to do."

Satya Nadella talked about how gaming can be a force for good in the world, and took a swipe (pun lol) at the doom-scrolling culture that has begun encroaching on our free time. He said "joy" in active-engagement hobbies like gaming and coding have an opportunity to make the entire world a better place.

"Attention is the a finite thing humans have. How can we earn permission, tastefully, for more of that attention? It brings joy back ... that's the thing I always think about. Gaming is an active engagement. It's not that passive 'scrolling' on things, and so on. I do want us to be the ones to bring back that active engagement. That's what console and PC represents in some sense. Why do people love the controller, the console, or their PC ... it's because you're immersed. I look at the reports. The level of hijacking of our attention that's going on ... I want us to reverse that. Joy in coding, joy in gaming, that's all I want us to live in. If we can bring that back, I think the world would be a better place for it."

Welcome context from Satya Nadella is long, LONG over due

Based on conversations I've had with Xbox staffers over the past few years, I can't help but feel some of Satya Nadella's comments here are probably long overdue.

I concede fully that I've taken a dim view of the way Satya Nadella has handled aspects of Microsoft's business, whether it's the rush to AI tools before they're really fit for purpose, the mishandling of the Surface brand, the death of Windows Phone... and the disconnection between Xbox and its fans of late. But it really does seem like Microsoft has identified that it's stepped off the rails a bit as it seeks to find itself in an increasingly chaotic consumer tech market.

"I want us to keep rediscovering that moment. The games people love, the consoles and systems people love, and really just doing the best job we can as a company. That's it. And that's all I want us to do," Nadella said in closing. "For those fans who have counted on us, I just want to make sure that we live up to what they expect of us. I know there's a lot of feedback ... believe me, I'm on Twitter too sometimes ... but I really think it's that passion, though, that they have. This is the base of folks who just want us to do a fantastic job, of really doing what we're meant to do as team Xbox."

This realization and acknowledgement of negative consumer sentiment does seem to be echoing across other Microsoft divisions beyond Xbox too, including contacts I have in Microsoft's AI and Windows stacks. The teams in Microsoft's various divisions have privately and even publicly in some cases spoke up about how energized they feel lately, and I think it's in part due to a generalized re-focusing on wanting to move Microsoft to a better place.

To hear it directly from Satya Nadella that the firm will "always" invest in gaming should be reassuring to those who have succumbed to fears that Microsoft isn't taking a long-term view here. Portents of Xbox's demise are decades old, and will probably continue as it celebrates its 50th anniversary in another 25 years from now too.

Xbox has a mountain of challenges to overcome. Xbox's marketing has become virtually non-existent and when it does exist, it has not resonated. The decision over exclusive content continues to cast a shadow over the console brand, and the anaemic hardware production and global footprint has left Xbox hardware with a sense of sliding relevancy. And this is before you consider external challenges, like the battered attention spans Nadella alluded to, and spending squeeze as non-gaming platforms and free-to-play games soak up revenue for traditional play.

Project Helix, comprising the large Xbox console ecosystem and wider Windows ecosystem, could be the unique catalyst Microsoft needs to rediscover its edge in the space. It'll be the fight of Xbox's life, but it sounds like the team is more ready than ever.

Should Xbox have exclusive games?

The debate over whether or not Xbox should have exclusive content has reignited since new CEO Asha Sharma took the reins. What do you think?

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Despite Microsoft’s meteoric rise, and one that made Bill Gates a billionaire, the same co-founder admitted he didn’t truly see the company as a success until the late 1990s, and often felt just one mistake away from death.

Microsoft isn’t called the software giant for nothing. Long before the razzle-dazzle of AI and Copilot, its bread and butter were Office and Windows, and they still are — driving broad adoption worldwide. That dominance helped transform Microsoft into a Fortune 500 powerhouse, with a market capitalization of $3.05 trillion at the time of writing.

Recently, CEO Satya Nadella seemingly expressed his gratitude to Intel and Apple for helping contribute to Windows and Microsoft Office's success in an interview with Morgan Stanley, though, as pointed out by our friends at PC Gamer, Nadella was specifically talking about the early days.

Back then, “Wintel” was a common term because MS-DOS was built for IBM PCs running Intel chips. For years afterward, Microsoft’s operating system became the default for home computing on Intel PCs.

They explain how Excel was first released on Mac, and the first GUI version of Word also debuted there before Windows. That likely happened because Apple’s original graphical OS, System 1, was more user-friendly (and popular) than Microsoft’s post-DOS Windows 1.0.

That said, Microsoft CEO Satya Nadella indicated that the company was moving away from Bill Gates' software factory vision. "That idea has guided us for decades," Nadella admitted. "But today, it's no longer enough."

The company is now doubling down on its efforts across security, quality, and AI transformation as its core business priorities.

💬 Does Microsoft still hold the fort in productivity?

Nadella’s views almost echo Apple's recent unveiling of its $599 MacBook Neo. In a promotional demo, Apple highlighted Word, PowerPoint, and Excel as the most-used apps, underscoring the software’s enduring dominance in productivity.

Even I juggle between Windows and macOS as my daily drivers, though lately I’ve admittedly been leaning toward the latter — maybe it’s the hype around the new MacBook Pro with its M5 Pro chip?

Still, when it comes to productivity, I rely more on Microsoft Office. Years of using Windows have made me appreciate its simplicity and the seamless integration across apps like Word, Excel, and PowerPoint. That said, investors have begun voicing concerns over Microsoft’s heavy spending on AI with little return so far, especially after growth in Azure and Microsoft 365 apps fell well below expectations last quarter.

Microsoft recently highlighted its commitment to make Windows 11 better in 2026 based on user feedback and even reevaluating its AI strategy, which may include streamlining its user experience across its ecosystem and even removing Copilot in apps like Notepad and Paint.

What do you think about Microsoft's current strategy with Windows and Microsoft Office? Share your thoughts with me in the comments.

Join us on Reddit at r/WindowsCentral to share your insights and discuss our latest news, reviews, and more.

Microsoft is spending serious money to get Copilot in front of more people, and influencers are a big part of that strategy.

According to a new report from CNBC, Microsoft and Google have been offering some creators between $400,000 and $600,000 for long‑term partnerships to promote their AI products. In Microsoft’s case, that includes campaigns centered around Copilot, its AI assistant that’s now woven into Windows, Microsoft 365, Edge, and more.

These aren’t one‑off sponsored posts. CNBC describes multi‑month or even year‑long deals where creators integrate AI tools into their regular content, tutorials, and workflows. For Microsoft, that means positioning Copilot not just as a novelty, but as something that fits naturally into how people work, study, and create.

Indeed, during Super Bowl 60, Microsoft featured Copilot's flagship capabilities in an ad, demonstrating how NFL insiders can leverage its capabilities to generate charts based on historical data.

While speaking to ADWEEK, a Microsoft spokesman indicated that:

“There isn’t a net new Super Bowl ad. This is an extension of an existing campaign.”

Anthropic also spent millions of dollars to air a 60-second pregame ad and a 30-second in-game ad to promote its AI efforts.

Those promos may be sorely needed. We recently learned that despite Microsoft's broad user base across its Microsoft 365 services, only 3.3% of its users actually pay for Copilot. However, Microsoft CEO Satya Nadella claims that people are using Copilot a lot, further claiming that it's "becoming a true daily habit".

To make matters worse, the broader creator landscape around AI is getting more complicated.

Separate reporting highlighted by CNBC notes that some influencers and creatives are turning down AI‑related sponsorships altogether, citing concerns about audience backlash, ethical questions around AI, or fears of being seen as “selling out” to a controversial technology. Those reports don’t specify which companies’ deals are being rejected, and they don’t directly tie those decisions to Microsoft’s offers in particular

Instead, what emerges is a picture of a split creator economy:
on one side, big‑money AI deals from companies like Microsoft and Google; on the other, creators who are wary of how AI is perceived by their communities.

For Microsoft, Copilot is a central pillar of its future across Windows and the wider ecosystem. Influencer campaigns are a logical extension of that push, especially as traditional advertising struggles to cut through and users increasingly rely on trusted personalities for tech recommendations and explanations.

But the same dynamics that make influencers powerful also make them cautious. Many creators are closely attuned to their audiences’ skepticism around AI, whether that’s about job displacement, data usage, or the quality and reliability of AI‑generated content. That makes AI sponsorships a higher‑risk category than, say, a typical hardware or game promotion.

What we can say with confidence is this:

• Microsoft is willing to spend big —up to the mid‑six figures in some cases—to get Copilot in front of creator audiences.
• Some creators, across the industry, are saying no to AI promos, even as the money on the table grows.
• The AI marketing race is now as much about trust and perception as it is about budget.

Copilot’s success won’t hinge solely on influencer campaigns, but these deals show just how important Microsoft believes creator‑driven adoption will be in the next phase of AI.

How do you feel about tech companies paying huge sums for AI promotions while some creators pull back? Share your take.

Join us on Reddit at r/WindowsCentral to share your insights and discuss our latest news, reviews, and more.

Microsoft's CEO, Satya Nadella, recently announced that the company's Security Chief, Charlie Bell, is moving on to a new role as an individual contributor, further indicating that he'll be replaced by Hayete Gallot, Google Cloud’s former President for Customer Experience, in an internal memo shared on the Microsoft blog.

Bell joined Microsoft in 2021 to spearhead operations in the tech giant's cybersecurity division. However, Microsoft insiders speculated that the executive was preparing to retire.

Bell isn't leaving the company despite the end of his tenure. Instead, his new role as an individual contributor will focus on engineering quality.

“Charlie and I have been planning this transition for some time, given his desire to move from being an org leader to being an IC engineer,” Nadella added. “And I love how energized he is to practice this craft here day in and day out!”

Gallot isn't exactly a 'new' hire at Microsoft. In fact, Nadella touted her 15 years of experience at the company in senior leadership roles across engineering and sales. Gallot left Microsoft in 2024 to lead customer experience operations for Google Cloud.

It's no secret that Microsoft has encountered a cascade of security failures in its cybersecurity departments. For instance, a group of Chinese hackers breached Microsoft email accounts belonging to two dozen government agencies.

Interestingly, the US government's silence has sparked concern among competitors and security experts, who cite Microsoft's influence and dominance in the industry as the primary cause.

Microsoft has so far struggled to deliver a lasting solution to the problem, particularly as hackers increasingly exploit advanced techniques, such as artificial intelligence, to launch attacks

"Security underpins every layer of the tech stack, and it's our No. 1 priority," Nadella indicated during the company's earnings report for FY24 Q3. "We are doubling down on this very important work, putting security above all else, before all other features and investments."

It'll be interesting to see if Microsoft re-hiring Gallot will help address some of these concerns.

Microsoft CEO Satya Nadella recently indicated that Copilot's user base has grown “nearly 3x year-over-year” during an earnings call, including AI chats, the news feed, search, browsing, shopping, and “integrations into the operating system.” It's unclear how much revenue the company is actually generating from the offering.

However, a new report suggests that only 3.3% of Microsoft 365 and Office 365 users who interact with Copilot Chat actually pay for it (via The Register). In contrast, Microsoft spent a whopping $37.5 billion on its AI-themed efforts, according to the company's latest financial earnings report for FY26 Q2.

Despite investor doubt and concern, Nadella indicated Copilot is"becoming a true daily habit," further citing "record" AI momentum. Microsoft's report on Copilot adoption and growth looks good on paper; it factors in approximately 15 million paid Microsoft 365 Copilot seats, which translates to 160 percent growth year-over-year.

However, the report doesn't categorically indicate that a huge chunk of Microsoft 365 users have access to the AI-powered chatbot for free, which, as highlighted by Directions on Microsoft analyst Mary Jo Foley, could roughly translate to 450 million users.

As such, beyond the bundled Microsoft 365/Office 365 deals and discounts, Copilot's paid user base is relatively small when compared with Microsoft's broad customer base. More importantly, the software giant's splurge on AI doesn't seem to be attracting similar returns.

In 2023, Microsoft launched its 365 Copilot offering as a $30-per-user, per-month add-on, which it marketed as an AI-powered productivity tool integrated into Word, Outlook, Teams, Excel, and PowerPoint.

The tech giant is seizing this moment to set itself apart from rivals like OpenAI’s ChatGPT. It touts Copilot as an AI agent with the capability of acting on behalf of users, searching internal documents, and analyzing meetings and emails.

Interestingly, Microsoft CFO Amy Hood dismissed claims about the company's spending and investment in AI not paying off, further indicating that judging its spend solely on the growth of its Azure cloud business is "the wrong yardstick."

Windows Central recently reported that Microsoft is reevaluating its AI strategy in Windows 11, which could involve streamlining or even removing features users don’t find valuable. That review may include Copilot integrations in apps like Notepad and Paint.

While it might still be too early to tell, Microsoft's decision to walk back its Windows 11 AI overload might be a result of backlash from users or investor concern over its exorbitant spending on AI with negligible returns to show.

It's no secret that generative AI requires exorbitant amounts of electricity and cooling water to function. Over the past few years, multiple reports have emerged, giving a glimpse of what it takes to keep these multi-billion-dollar data centers operational.

According to OpenAI CEO Sam Altman, ChatGPT uses 0.34 watt-hours for every query response, "about what an oven would use in a little over one second, or a high-efficiency lightbulb would use in a couple of minutes."

On the other hand, GPT-5's predecessors, including OpenAI's GPT-3 model consumes four times more water than previously thought, while GPT-4 consumes up to 3 water bottles to generate a mere 100 words.

However, on a grander scale, Microsoft and Google's electricity consumption reportedly surpasses the power usage of over 100 countries. While speaking at the World Economic Forum in Davos, Switzerland, Microsoft CEO Satya Nadella indicated that the cost of energy will be a key indicator of deciding which country will emerge as the winner in the competitive AI race.

The executive further indicated that "GDP growth in any place will be directly correlated" to the of energy in using AI. He further referred to "tokens" as the new global commodity, the units bought by users to process tasks when interacting with AI chatbots and models.

“The job of every economy and every firm in the economy is to translate these tokens into economic growth, then if you have a cheaper commodity, it’s better,” added Nadella.

As you may know, there's a global shortage of DRAM, which has consequently contributed to its prices shooting through the roof. Top AI research labs have invested billions of dollars to build data centers across the world, leading to a surge in demand for these components. As a general rule of thumb, when supply doesn't meet demand, the only way to find a middle ground is to increase the price. And that's exactly what's happening.

Related: Microsoft CEO Satya Nadella says AI needs to prove its worth in the real world

Microsoft's CEO says AI labs must build "a ubiquitous grid of energy and tokens." He further indicated that it's important for organizations to integrate AI into their workflows, referring to the tech as a "cognitive amplifier" with "access to infinite minds."

Does AI still seem like a profitable venture for Microsoft with all the issues abound? Share your thoughts in the comments and cast your vote in the poll!

Key figures heavily invested in the generative AI landscape congregated at the World Economic Forum in Davos, Switzerland, to share their thoughts about the current state of the technology, further highlighting their aspirations and goals.

DeepMind CEO Demis Hassabis and Anthropic CEO Dario Amodei indicated that they can already see early signs of AI taking over junior roles at their own companies. Last year, Amodei warned that AI was on the precipice of slashing 50% of entry-level white-collar jobs, leaving the next generation without work.

Microsoft CEO Satya Nadella shared some insightful thoughts about AI at the conference, suggesting that AI could potentially lose public support unless it is used to deliver tangible, real-world impact.

Last year, the executive revealed that he was less concerned about AGI benchmarks, indicating that he is more keen on delivering real-world impact with AI.

RELATED: Satya Nadella says Microsoft could lose "social permission" to burn electricity for AI unless it offers something useful

Interestingly, Nadella's comments about AI needing to prove its usefulness in society, weeks after he expressed his desire and hope for society to embrace the technology as it continues to advance and move on from heavy mockery and criticism of AI slop.

However, Nadella's plea seemingly had the opposite effect, earning Microsoft a new nickname — Microslop. Now, the executive says more organizations need to get on board with AI on a larger scale to prevent it from becoming a bubble.

Last year, Microsoft co-founder Bill Gates warned of an AI bubble, primarily driven by investor enthusiasm and overvalued companies, while likening it to the dot-com bubble. "There are a ton of these investments that will be dead ends," Gates added.

As you may know, Bill Gates was initially skeptical about Microsoft investing $1 billion in OpenAI in 2019 due to its non-profit business structure. "You're going to burn this billion dollars," Gates warned.

Satya Nadella's push for broad AI adoption comes as Microsoft invests billions of dollars into the ever-elusive landscape for model training, computing power, and infrastructure.

In case you missed it, OpenAI is reportedly on the verge of making a $14 billion loss in 2026, which could potentially lead to bankruptcy by mid-2027. The ChatGPT maker is reportedly biting off more than it can chew with its expenditure on infrastructure expansion, model training, research hiring, and compute costs.

Will AI deliver real change in society, or it just a fad? Share your thoughts in the comments and cast your vote in the poll!

Microsoft's $1 billion bet on OpenAI in 2019 potentially redefined the software giant's trajectory, even though co-founder Bill Gates was initially against the move. "You're going to burn this billion dollars," Gates warned Satya Nadella.

Over the past few years, the tech giant has faced significant backlash from its users, who have complained about a wide range of issues, including Windows 11's flawed user experience and design elements, as well as the company's decision to end support for Windows 10 on October 14, 2025.

However, there's now a new kid on the block, which has seemingly become the pariah on the playing field. Microsoft's fixation and obsession with injecting AI across its entire tech stack has not sparked the enthusiasm and reception the company hoped for.

Now that Microsoft CEO Satya Nadella relinquished some of his duties to newly appointed CEO Judson Althoff, he wrote a blog post about his hopes and aspirations for 2026, which were, as you might have guessed, centered on AI. The executive expressed his desire and hope for society to embrace the technology as it continues to advance and move on from criticism of AI slop.

However, the blog post had the opposite effect on consumers than he'd hoped for, fueling widespread mockery and the generation of a new nickname for the tech giant — Microslop, which might be a good contender for the Word of the Year in 2026.

NVIDIA CEO Jensen Huang seemingly shares the same sentiments, recently indicating that the "doom narrative" about AI is causing more harm than good to society. The executive argues that the narrative is blocking investment that would have been used to make the technology safer.

And as it now seems, the AI hate train isn't stopping anytime soon. As first spotted by Windows Latest, someone just developed a new browser extension in Google Chrome called Microsoft to Microslop. And as you might have guessed, the extension automatically replaces every mention of Microsoft on the internet with Microslop.

As highlighted by the developer:

“This extension only visually manipulates the text – the real data on the webpages is not manipulated. If you inspect the element, it will still contain the correct “Microsoft” expression, so no links or download-links will break.”

The developer also indicated that the browser extension will not collect or store any data.

Will Microsoft dodge the AI banter storm? Share your thoughts in the comments!

Last year, Merriam‑Webster named “slop” as Word of the Year, defining the term as low-quality digital content produced in quantity by AI. This didn't come as a surprise, considering the rapid advances and adoption of the technology across the world.

Microsoft CEO Satya Nadella wrote a heavily AI-inspired blog post highlighting his hopes and aspirations for the technology in 2026, even as the company continues to heavily integrate the technology across its tech stack despite backlash from users, which has seemingly contributed to widespread mockery and the generation of a new nickname for the tech giant — Microslop.

Nadella expressed his desire and hope for society to embrace the technology as it continues to advance and move on from criticism of AI slop. And as it now seems, the Microsoft executive isn't alone on this. NVIDIA CEO Jensen Huang has also entered the chat.

While recently speaking at the No Priors Podcast about robotics, reasoning models, and unpacking the AI bubble narrative, Huang revealed that he wasn't happy about the negativity around generative AI in society.

The executive described the negative theories and conspiracies about AI as a "doomer narrative," which is not helpful to society. The technology promises to alleviate poverty, cure diseases like cancer, and more, but these are yet to be realized.

Huang indicated that there's a battle of narratives between people who believe AI will have a positive impact on society and critics. While the executive admitted that it is "too simplistic" to dismiss either of the views, he indicated that some of the narratives from AI critics and doom-mongers have a negative implication for the progression of AI development.

While Huang didn't point any fingers, he blatantly dismissed claims from Anthropic CEO Dario Amodei about AI's potential to slash up to 50% of entry-level white-collar jobs, leaving Gen Z without work within 5 years.

According to Huang:

"Their intentions are clearly deeply conflicted, and their intentions are clearly not completely in the best interest of society. I mean, they're obviously CEOs, they're obviously companies, and obviously they're advocating for themselves."

The executive concluded by indicating that all the negativity around AI is actually scaring people from making investments in AI that could actually make the technology safer, more functional, more productive, and more useful to society.

Interestingly, the comments come from an executive whose company is heavily invested in the AI landscape, with multiple deals involving top research labs in the industry.

Have negative AI comments caused harm to society and AI safety? Share your thoughts in the comments and cast your vote in the poll!

The Streisand effect continues to be real, as Microsoft CEO Satya Nadella's AI comments go viral.

A couple of days ago, Nadella penned a short note on his hopes for artificial intelligence going into 2026. As you know, Microsoft is very much "all in" on AI, with Azure providing a significant chunk of the backbone for OpenAI's ChatGPT. Microsoft has been baking its ChatGPT-powered Copilot app into virtually every product it has, whether you like it or not. The brute force by which Microsoft is introducing these products has led to an unrelenting backlash on social media, and Nadella's latest comments reignited the commentary in a big way.

In the piece, Nadella said that he hoped society would "move on" from questions of "slop" for AI — emphasizing that for the technology to gain acceptance, it needs to move beyond spectacle.

Indeed, the vast majority of AI usage in the mainstream consciousness right now revolves around misinformation, dumb memes, and at worse, illegal abuse. xAI's Grok is currently being investigated by various authorities for allowing sexualized AI images of children, and OpenAI's ChatGPT is being sued for potentially causing a dreadful murder-suicide. But hey, at least we can generate cat memes more quickly than we could previously.

As such, it certainly doesn't seem like society at large is ready to accept AI as Microsoft's Nadella hopes. "Microslop" began trending on X yesterday, in the wake of our coverage on the topic.

Various uses across Instagram, reddit, X, Facebook, and beyond criticized Satya Nadella's approach to artificial intelligence, as the public's malcontent with the technology continues to expose deep gulfs between Big Tech's hopes and what individual consumers actually want.

The word of the day was "Microslop," which trended hard across X and other platforms.

Proponents of artificial intelligence such as OpenAI's Sam Altman have claimed for years that AI will be able to cure cancer, solve interstellar propulsion, and save humanity from the drudgery of the 9-5. None of these "positive" outcomes have, or likely ever will, come true.

What is presently happening is that AI is rapidly disrupting entry-level jobs, predicted to create an unprecedented wave of youth (and higher) unemployment. Many economists think OpenAI's circular purchasing commitments could blow up in its face, creating an economic black hole that tax payers will likely have to fill. AI is also contributing to an absurd shortage in DRAM, as Altman and other's demands for compute begins pricing consumers out of basic tech.

For stakeholders, the "positives" are widely expected to revolve around automating people out of a job, for the direct benefit of Wall Street. Indeed, AI hasn't delivered any tangible benefits for society whether Satya Nadella, Altman, and others, like it or not.

What AI has become is the focal point of everything wrong with our economic system, and the absurd glut of power Big Tech now enjoys to actively and intentionally shape our daily lives for the worse.

As such, the backlash will deservedly continue — and Microslop is its name.

The fact my first article of 2026 is about artificial intelligence is probably tone-setting for what will be another year dominated by AI news and headlines.

It's hard to avoid right now, particularly if you're a user of Microsoft ecosystem products. Every single app, service, and product Microsoft has on the market now has some kind of AI integration, regardless of quality and usefulness.

Microsoft Copilot is the tip of the spear for the firm, powered entirely by ChatGPT and Microsoft's savvy early investments in OpenAI. Its interface is pre-installed now on Windows PCs, and has a commanding position on most mobile app stores as of writing. It's nowhere near as widespread as OpenAI's ChatGPT service, though, and advancements in Google Gemini sees Microsoft's old arch rival rapidly outpacing the competition — particularly in enterprise integrations, where Microsoft has its sights primarily set.

The oft-forced, oft-useless Microsoft Copilot integrations on Windows and other consumer products have people exploring alternatives more so than ever before. Entire governments are abandoning Windows for Linux, and there's more interest in Linux consumer-grade distros than any time I can remember. Despite the noise about the degradation of quality in Windows, the price gouging on Xbox, and the apparent abandonment of Surface — Microsoft CEO Satya Nadella made no mention of any of them in a recent post (via LinkedIn) to close out the year.

If you had any illusion that Microsoft might address concerns about any of its major product categories in 2026, Nadella's "Looking Ahead to 2026" article offers an insight into the company's focus for the new year, and yep, it's all about AI.

"As I reflect on the past year and look toward the one ahead, there’s no question 2026 will be a pivotal year for AI. Yes, another one," Nadella opines. "But this moment feels different in a few notable ways."

"We have moved past the initial phase of discovery and are entering a phase of widespread diffusion. We are beginning to distinguish between “spectacle” and “substance”. We now have a clearer sense of where the tech is headed, but also the harder and more important question of how to shape its impact on the world."

Nadella is, of course, correct that AI is becoming ubiquitous. Some estimates suggest that AI tools are used daily by upwards of a billion people, and it will only continue to rise in the coming year. I'm not sure I agree that it's moving beyond its "spectacle" phase. AI discourse continues to to be dominated by memes, disinformation, hallucinations, and a near-total, and potentially dangerous lack of profitability. Multiple billions of dollars in ethereal commitments, often described as the "AI bubble," has many leading economists nervous.

Nadella also claims in the piece that AI will be a "scaffolding" for human potential, rather than a substitute. I can't help but think this is either naively utopic, or at worse, wilfully dishonest. The vast rush of AI investment revolves entirely around Wall Street's hunger for automation — replacing "expensive" humans with cheap robots and facsimiles. Microsoft itself laid off tens of thousands last year, while boasting 30% of its code was now being written by AI. It certainly hasn't led to a visible increase in productivity, quality, or customer satisfaction.

Still, Nadella claims that we'll move away from "models" to "systems" that lead to real world impact in 2026, noting that it will require "engineering sophistication" to find AI's real world value. At a reach, I can only hope this means Microsoft's AI features in Windows will evolve to actually become useful. Today you need prompt engineering expertise or custom tools to make Copilot even vaguely useful at home, even before you consider having to fact-check everything it claims. Features that should be simple like generative editing in Microsoft Photos or generating subtitles in Microsoft Clipchamp straight up don't work.

Indeed, in closing, Nadella seems to admit that AI doesn't truly have "societal permission" right now, referencing widespread backlash and mockery that continues to dog the technology.

"We need to get beyond the arguments of slop vs sophistication," Nadella laments, emphasizing hopes that society will become more accepting of AI, or what Nadella describes as "cognitive amplifier tools." "...and develop a new equilibrium in terms of our “theory of the mind” that accounts for humans being equipped with these new cognitive amplifier tools as we relate to each other."

There is research that AI use may actually harm cognitive ability by the way. But I digress.

AI is important for the company's future — but the hyper-fixation is almost weird

"We need to make deliberate choices on how we diffuse this technology in the world as a solution to the challenges of people and planet," Nadella says. "For AI to have societal permission it must have real world eval impact."

I'm not sure if it's cynicism on my part, I constantly question myself with regards to discussions on this tech, but Nadella once again comes across as naïve here. And it reminds me of his fling with the "Metaverse" of previous years — another tech buzzword buried in the graveyard of overhype alongside things like NFTs and LaserDisc.

If you go back and listen to Satya Nadella's comments on "the metaverse" from just a few years ago, you'll see what I mean. It was all about holograms, heads-up displays, and other products that ultimately went nowhere. A cloud of fluffy technobabble and utopic thinking — that served only to trick investors into thinking Microsoft was at least somewhere on the curve.

Of course, now we know it was as unreal as the holograms themselves. Even Apple failed here, scaling back production of its ridiculous Vision Pro headsets. Facebook, who literally rebranded its company to Meta for this, is also sacrificing its VR aspirations on the pyre of AI to the tune of wasted billions. To Microsoft's credit, it hardly went all in, likely sensing that it was set to be a fad. But it certainly doesn't seem to be treating AI with the same sense of caution.

Nadella has shown himself to be an incredibly savvy businessman, playing Wall Street with confident utopic promises atop a roaring and seemingly infinitely potential cloud business. But the attention on the share price, rather than the "real world impact" Nadella talks about, has many customers primed to abandon ship. To say Microsoft is resting on its laurels truly understates the situation here in my view, as Nadella seems to be falling into the same trap that has buried many other great businesses and brands in the past.

AI should be a pillar of Microsoft without question, but "legacy" products, like Office, Windows, and their customers is the foundation it's built on — Nadella's Microsoft truly seems to have lost sight of this. Without attending to the needs and feedback of these customers, there is no "AI" for Microsoft.

But, like the "metaverse," perhaps Microsoft isn't truly serious about any of it. And until then, I think we'll still be referring to Microsoft's integrations as "slop" for the foreseeable.

Update: After posting this article, "Microslop" began trending on social media. 🫠

It's no secret that pursuing generative AI is an expensive venture; this can be narrowed down to the technology's exorbitant demand for computing power and the talent required to make sophisticated advances.

It's amid emerging claims that scaling laws have begun to stop, preventing top AI labs like OpenAI, Anthropic, and Google from developing advanced AI models. Microsoft and OpenAI recently renewed the terms of their multibillion-dollar partnership under a new definitive agreement, which allows the software giant to pursue AGI independently or in collaboration with third parties.

And as it now seems, we might have just gotten a vague idea of what it might cost to keep up with the ever-evolving AI industry.

During a recent episode of the Moonshots with Peter Diamandis podcast, Microsoft AI CEO Mustafa Suleyman indicated that it will cost "hundreds of billions of dollars" to keep up with frontier AI development over the next 5-10 years. (via Business Insider). "Not to mention the prices that we're paying for individual researchers or members of technical staff," the executive indicated.

Interestingly, the executive compared Microsoft to a "modern construction company" with hundreds of thousands of workers building gigawatts of CPUs and AI accelerators.

The executive indicated that the cost required for frontier AI model development, but admitted that "clearly there's a structural advantage by being inside a big company."

However, Microsoft isn't throwing in the towel on AI anytime soon. According to a leaked internal memo, CEO Satya Nadella is seemingly ushering in a new dawn for Microsoft with a keen focus on intelligence, integration, and AI. The executive admitted that Bill Gates' software factory vision might have worked for decades, but it's no longer enough.

Nadella is reportedly pressuring high-profile executives to work faster and leaner on AI projects or leave the company. Insiders indicated that Microsoft is attempting to fly a sinking ship with "gimmicky" AI tools while other products take a backseat.

Following Microsoft's new agreement with OpenAI, AI CEO Mustafa Suleyman indicated that "Microsoft needs to be self-sufficient in AI. And to do that, we have to train frontier models of all scales with our own data and compute at the state-of-the-art level."

Microsoft has already formed a new MAI Superintelligence team to pursue this feat.

This news comes as investor interest in generative AI has begun waning, as they continue to question the billions plunged into the industry without a clear path for revenue generation.

It will be interesting to see Microsoft venture into its next chapter with a bias in AI despite the capital issues that abound. Mustafa Suleyman also indicated that Microsoft would jump ship on its AI projects if it poses a significant threat to humanity, aligning with his campaign for humanist superintelligence.

Do you think Microsoft will eventually come out on top in AI? Let me know.

Microsoft appears to be taking an all‑gas‑no‑brakes approach to AI development under CEO Satya Nadella’s leadership.

According to an internal memo exclusively obtained by Business Insider, Nadella is reportedly pressuring high-profile executives and teams to "work faster and leaner — all designed to consolidate power around AI leaders and radically reshape how the company builds and funds its products".

In August, Microsoft's CEO indicated that Bill Gates' software factory vision for the company is dated. While it may have played a role in the tech giant's immense success, Nadella believes it's time to move on from this mentality and embrace new strategies, particularly in the realm of AI. "That idea has guided us for decades," indicated Nadella. "But today, it's no longer enough."

The company is seemingly shifting its focus from solely software development to intelligence, integration, and AI as it unlocks a new chapter. However, Microsoft executives are having a rough time adjusting to the new reality.

Speaking to Business Insider on the condition of anonymity, a Microsoft executive indicated that "Satya is pushing on intensity and urgency." As a result, some Microsoft veterans are in a tough spot, battling over whether to stay the course and power through the workload needed to bring Satya Nadella's AI dream to fruition or leave the company. "You've gotta be asking yourself how much longer you want to do this."

Amid reports suggesting that virtually no one is using Microsoft Copilot, prompting investors to raise concerns about returns on their multibillion-dollar investments in the seemingly elusive and ever-evolving technology, the plans aren't letting up.

It's reported that Nadella is having conversations with executives across the company to sign on for the transformation or depart. Nadella has already made elaborate measures to ensure that his AI vision for Microsoft takes off.

For instance, Microsoft execs told Business Insider that the new appointment of Judson Althoff as CEO of the company's commercial business was a well-calculated move by Satya Nadella:

Satya Nadella reportedly launched a weekly AI accelerator meeting and a dedicated Teams channel to help bolster and accelerate the company’s AI efforts. He’s also using these platforms to share distinctive ideas.

Business Insider's Ashley Stewart reported that executives don't make presentations during these meetings; instead, junior technical fellows are encouraged to contribute and share their thoughts about the AI and its trajectory.

Elsewhere, the damning report also indicated that there might be some major shakeups in Microsoft's top management, with Rajesh Jha, lead of Microsoft's Office and Windows, and Charlie Bell, the cybersecurity boss, set to retire in the foreseeable future. However, Microsoft spokesman Frank Shaw seemingly dismissed these claims, indicating that there are no expected changes in the company's senior leadership in the short term.

Coincidentally, a separate report from last year highlighted Microsoft insiders' doubts about the company's AI strategy and its perceived fixation on the technology. Some indicated that the company was attempting to fly a sinking ship with Copilot, while a high-ranking executive referred to some of Microsoft's AI tools as "gimmicky" because they barely work.

This has to make for some awkward reading at the Microsoft coffee table.

Recently, Time Magazine debuted its annual "Person of the Year" cover story. The tradition began in 1927, and has since depicted individuals that have made the biggest impact on world events throughout the year — for better or worse.

Previous winners of Time Magazine's "Person of the Year" cover story include the likes of world leaders, including Donald Trump, Barack Obama, and Franklin D. Roosevelt, activists like Greta Thunberg and Nelson Mandela, and often times scientists and technologists, like Elon Musk and former Intel CEO and chip architect Andrew Grove.

This year's Time "Person of the Year" edition features a group of people, titled "The Architects of AI." It's a recreation of the famous "Lunch Atop a Skyscraper" photograph that showcases New York construction workers working on the city's iconic skyline — dangerously perched on a steel girder without safety equipment. Let's put the metaphor for the dangers of AI and gaping pitfall of a potential stock market "bubble" to one side for a moment, because there's an interesting omission here that underpins how Microsoft is falling behind in the race for relevancy.

The photograph features eight world leaders in technology, server infrastructure, and AI science. From left to right, we have Mark Zuckerberg of Facebook fame, Lisa Su of AMD, Elon Musk of xAI and Grok, Jensen Huang of NVIDIA, Sam Altman of OpenAI and ChatGPT, Demis Hassabis of Google DeepMind, Dario Amodei of Anthropic and Claude, and pioneering AI researcher Fei-Fei Li.

Notice any particular absences?

All of the people depicted here are directly responsible for funding and building frontier AI models, whether it's ChatGPT, Claude, Llama, Grok, or Google Gemini. The lack of inclusion for Microsoft AI, run by Mustafa Suleyman and brokered by CEO Satya Nadella, showcases how far behind the frontier of AI research Microsoft actually is.

Microsoft is functioning as an investment bank in existing AI products, re-selling NVIDIA GPUs as part of Microsoft Azure and re-selling ChatGPT as part of Microsoft Copilot. Microsoft's home-grown AI models, including MAI, aren't generally used and sport limited public API access, and its benchmarks aren't public either.

The lack of representation for Microsoft really underlines the company's status as a background player in artificial intelligence, nowhere near the forefront of the race.

Forced integrations and investments aside, is Microsoft actually serious about AI?

I've written recently about how Microsoft's fumbling and panicked behavior over artificial intelligence risks undermining its customer's needs. It's certainly undermining Windows' reputation.

Windows 11 hate is going utterly mainstream, with weak and forced Copilot features in everything from Microsoft Word to Notepad tears into the company's public image, but for me, it goes beyond social media "haters" simply disliking AI — Microsoft's AI products simply aren't good.

I'm not sure exactly what Microsoft did to make its version of ChatGPT dumber, but Copilot returns weaker results than ChatGPT generally speaking. AI imaging features in Microsoft Photos are absolutely pathetic compared to Google or even Samsung's photo editing tools on Android.

Integrations in Outlook and Microsoft Edge are invariably useless compared to integrations in Gmail and Chrome, and Xbox's "Gaming Copilot" tries to make up solutions out of thin air if it doesn't have a gaming website to steal information from.

CEO Satya Nadella has previously spoken about how he wants Microsoft to be an AI-first company, while declining to provide any innovative, or perhaps more crucially, useful AI products of its own. Windows Recall was called a privacy nightmare when it was announced, and other features like Click-To-Do haven't exactly ignited a rush on Microsoft AI products.

The whole situation is eerily similar to Microsoft's haunted Windows Phone project. Microsoft partnered with Nokia, creating friction at a time where competitors were moving far faster — similar to Microsoft's partnership with OpenAI, which has been reportedly fractious. Microsoft's short-term thinking and half-hearted execution led to Windows Phone eventually being mothballed, and that same lack of passion and cadence for releasing half-baked products seems to be typifying Microsoft's AI products as well.

Users are making use of products like Github Copilot and Microsoft Copilot, but much like products like Outlook and Microsoft Teams, Microsoft's strategy seems to revolve around offering a weaker, cheaper alternative — rather than be at the cutting edge for quality. Given how expensive AI actually is to run, it's unclear if this can be a winning strategy for artificial intelligence.

In any case, they say photographs are worth a thousand words, and the above photo is symbolic of various things. From the arguably tone deaf nature of multi-millionaires and billionaires being depicted as construction workers literally risking their lives to build New York's skyline, to the lack of guardrails building what could end up being a superior intelligence. For better or worse, Microsoft's role in the future depicted here is one of absentia, echoing other computing revolutions the company failed to capitalize on.

Even as speculations suggest that top AI labs like OpenAI and Anthropic have hit a wall due to a shortage of high-quality training data, hindering the development of more advanced models, the generative AI race remains fiercer than ever.

However, investors continue to raise concerns about the billions being plunged into the ever-evolving technology without a well-established profitability path. Microsoft co-founder Bill Gates warned of an AI bubble while comparing it to the dot-com era, where several internet-based companies became overvalued, leading to a significant crash.

Microsoft has arguably been at the forefront of advances and developments in the generative AI landscape, primarily due to its multibillion-dollar partnership with OpenAI, integrating next-gen capabilities across its tech stack.

Despite Microsoft’s massive bet on AI through heavy investments and deep integration across its product ecosystem, including Windows, which some speculate could evolve into an agentic operating system, CEO Satya Nadella appears to be grappling with the challenge of steering the software giant toward an AI‑driven future.

While speaking with Mathias Dpfner, CEO of Axel Springer, the executive admitted that he spends of of his weekends learning about how startups build and develop products. Nadella indicated that Microsoft's size "has become a massive disadvantage" as it tries to establish dominance in the AI space (via Business Insider).

According to the executive, startups are able to make informed decisions quickly because everyone involved in the product development process all sit at the same table. Perhaps more interestingly, Nadella seemingly shared a solution for this issue: unlearning old habits and techniques that once made companies successful and embracing new approaches.

It's interesting that Nadella makes these comments. Earlier this year, the executive indicated that Microsoft was moving away from Bill Gates' revolutionary software vision, which helped build and contribute to the company's immense success. He claimed that the approach might become obsolete in the AI era. Moving forward, Microsoft is poised to double down on security, quality, and AI transformation as its core business priorities.

Unfortunately, Nadella's comments could also be seen as a signal that more Microsoft layoffs are on the horizon, under the guise of "efficiency." Comments like the above may be laying the ground work. Our sources have suggested that there are rumors swirling internally of another round of early 2026 layoffs, even after 2025's massive 15,000 cuts — also reportedly inspired by AI.

For note, Microsoft CEO Satya Nadella's pay package hit $96.5 million this year.

Earlier this year, OpenAI unveiled its long-anticipated GPT-5 model with major improvements across reasoning, code quality, and user experience. While some believed that the model would constitute AGI (artificial general intelligence), expectations were quickly watered down with some indicating that it shipped with a degraded user experience, glitches, and bugs.

As you may know, OpenAI and Microsoft have been shifting the goal posts as they delve deeper into the AI landscape, seemingly indicating that AGI is no longer the end goal. Instead, CEO Satya Nadella is more interested in delivering real-world impact using the technology, while Sam Altman is locked in on self-replication.

During a recent interview with Dwarkesh Patel and SemiAnalysis founder Dylan Patel, Microsoft's CEO shared some interesting insights about his thoughts on AGI. While seemingly excited about the concept and its potential to deliver exponential growth through productivity, the executive believes that there's a dire need for multiple models and ecosystems rather than relying on one model for everything.

The executive admits that the technology has the potential to drive exceptional growth, but it is still in its early stages. As such, rather than focusing on building toward and achieving AGI, the executive is more inclined toward the technology's human utility.

Nadella revealed that his favorite definition of AI is from computer scientist Raj Reddy because it is very human-centric. “He had this metaphor for AI: it should either be a guardian angel or a cognitive amplifier. I love that. It’s a simple way to think about what this is," Nadella added.

But he also acknowledged that the most common definition of AGI brands it as a powerful AI system that surpasses human cognitive capabilities. The conversation evolved into a scenario where an AI research lab unlocks the coveted benchmark with a single model that eventually gets deployed everywhere, with the capability to continuously learn and potentially take over every job in the economy.

Perhaps more interestingly, when asked about Microsoft's response to such a scenario and whether it would let the company capture all the value. The executive responded as highlighted below:

“If there’s literally one dominant model, deployed everywhere, ingesting all the data and continuously learning, then yes: that’s game, set, match. You’d basically stop shop.”

The executive added that the model companies and "scaffolding companies" will need to work together. Nadella said that model companies could be at risk of facing a "winner's curse". "You may have done all the hard work, done unbelievable innovation, except it’s one copy away from being commoditized."

FAQ

Microsoft's multi-billion-dollar bet on OpenAI has received backlash from AI critics, claiming that the technology might be just a bubble waiting to burst. The controversial partnership has also raised concerns among investors, primarily due to a lack of a clear profitability path.

As you might know, a recent report suggested that OpenAI might have lost $11.5 billion chasing the AI hype, per Microsoft's financial report for the fiscal year ending June 30. It's still unclear whether OpenAI breaks even from its ChatGPT and LLM access fees revenue.

Despite pushback from critics to invest in OpenAI, including Microsoft co-founder Bill Gates, who claimed that it would be like setting billions of dollars ablaze, Satya Nadella moved forward with the plans. Admittedly, the partnership (arguably the best "tech bromance" in history) has been through a lot of tension, especially during OpenAI's planned evolution into a for-profit venture to avoid hostile takeovers and outsider interferences.

However, the companies recently renewed their vows under a new definitive agreement with a new clause, which dictates that OpenAI can only declare AGI once an independent expert panel has verified the claim.

More recently, OpenAI CEO Sam Altman revealed how Microsoft's early bet and investment in the company have played an instrumental role in its success in the ever-evolving AI landscape while referring to their partnership as "one of the great tech partnerships ever" (via Benzinga).

Altman admitted that OpenAI's journey began on shaky grounds, revealing that there was little certainty about the technology's trajectory and potential to evolve and thrive. "We just had a lot of conviction in this one idea of pushing on deep learning and trusting that if we could do that, we’d figure out ways to make wonderful products and create a lot of value," the executive added.

Bill Gates isn't the only leader in the tech industry who's openly expressed his concerns and fears about the Microsoft-OpenAI partnership. When the ChatGPT maker launched GPT-5, Tesla CEO and billionaire Elon Musk claimed that "OpenAI is going to eat Microsoft alive," further building upon his long-standing feud with OpenAI, Sam Altman, and Microsoft.

Even Salesforce CEO Marc Benioff predicted that Microsoft wouldn't use OpenAI's technology in the future after the company announced its $500 billion Stargate project to facilitate the construction of data centers across the United States, which consequently cost Microsoft its exclusive cloud provider status.

It'll be interesting to see what shape and direction the partnership takes, especially under the new agreement.

FAQ

Xbox is in a period of transition, as it struggles to find a strong footing in the post-Xbox console era.

The console wars are over, declared GameStop (and the White House?), with Xbox thoroughly trounced by PlayStation and Nintendo. But, Microsoft CEO Satya Nadella isn't doom and gloom about Xbox's platform future, at least not yet.

In comments just yesterday, Nadella said he was looking forward to the next Xbox "console" (although he oddly avoided using the word "Xbox" throughout the interview.) He seemingly confirmed our report that the next Xbox would be more PC-like than ever, touting Windows as the world's biggest gaming business.

He omitted that, the vast majority of platforms building on Windows' openness don't actually send a dime in revenue back to Microsoft, but hey, Nadella has other competitors in mind, apparently.

Nadella echoed comments from PlayStation alumni Shawn Layden and also Microsoft's own Matt Booty that, the primary competitor against the gaming industry all up are addictive short-form video feeds, such as TikTok and Instagram Reels.

Commentators had thoughts about this statement, mostly negative thoughts. It felt as though Microsoft was deflecting its inability to compete directly with PlayStation and Steam, blaming scapegoats instead.

My take is slightly different, though, and it betrays something we all know and take for granted about Microsoft. Does TikTok compete with Xbox? Yes ... but that's Microsoft's own fault. It's because Microsoft is painfully uncool.

Xbox and gaming DOES compete with TikTok, Instagram, etcetera ...

Obviously, the gaming industry does compete with TikTok and YouTube Shorts and the like. This is why you've started to see games appear in your Netflix app in reverse.

Streaming media platforms have grown faster than gaming has. Social media apps like TikTok has grown faster than gaming has. When it comes to choosing what to do in your leisure time, you typically only opt for one hobby at a time — if indeed doom-scrolling counts as a hobby.

If you search the web, there's a variety of analyses that put daily social media use at anywhere between 2–3 hours per person, depending on whose figures you look at.

Gaming is generally regarded at a lower ebb than that, hitting 1–2 hours, while simultaneously having a smaller audience — particularly if you separate hyper-casual mobile gaming out of the equation.

Doomscrolling, Netflix, or traditional core gaming obviously compete for our free time and attention. It's not really an activity you do at work (generally speaking ...) and in those short hours you can truly call your own of an evening, the immediacy and ease of access of things like TikTok do seem to be winning out.

At least, to some degree.

Companies are eager to point to forever games like Fortnite and Roblox at bucking some of these trends, but both of these kind of occupy the same social space as things like TikTok and Instagram Reels in my view.

Fortnite and Roblox are hyper-social, and hyper-cultural in their design and functionality. The throwaway mini-games Roblox is known for could be analogous to the scrollable algorithmic content you find in a social media feed, complete with in-game messaging systems and platform-exclusive memes and cultural notes.

Microsoft could and should be offering experiences that align more closely with this. Roblox is obviously on the Xbox platform, but the Xbox platform itself could and should be the vehicle that competes with TikTok et al. for the cultural relevancy Satya Nadella seems simultaneously envious and ignorant of.

... but Microsoft's anti-culture corporatism is WHY it can't compete with social media.

A very recent, relevant example of Microsoft's failure to adopt and lean into culture can be found in its new Copilot AI personification. Mico, an impersonal blob, will now appear when you use Microsoft Copilot's voice mode.

Nobody cares about Mico, nor will they ever care about Mico. However, they did care about Cortana, back when Microsoft's first AI-like assistant debuted on Windows Phone.

Why? Because Cortana is the famous AI from Halo. Microsoft itself acknowledged its own 90s assistant Clippy with Mico, but only if you tap him lots of times as a weird easter egg. You were SO close, Microsoft.

Microsoft can't complain about TikTok eating its lunch when it's reluctant to lean into its own cultural identity. Mico should be Clippy or Cortana all up, instead of this forgettable slime mould. And don't get me started on renaming all of its iconic brands to "Whatever 365 Copilot."

When Satya Nadella referred to the Xbox strategy as being "like the Office strategy," I rolled my eyes so hard that I saw the inside of my skull — and even my brain matter looked disappointed.

The mind that would conflate gaming with Microsoft Office is exactly the reason why Xbox can't compete with TikTok. It's not because TikTok is somehow inherently better as a medium — it's because it has replaced the corporate and controlled, unhuman and cold environment that Xbox as a network has become.

Xbox has lots of social features, but they're hidden away and buried in menus upon menus, instead of being front-loaded and celebrated. The Xbox PC app won't even let you reply to developer updates, and you can't share clips or content anywhere there either. It's the antithesis of Steam, which has gradually become a social platform in its own right.

I get that Microsoft wants to remain cautious here. Moderation and safety is incredibly important on these types of platforms, but the vast majority of players are now adults who don't need to be treated like children. Microsoft has robust tools to protect kids already anyway.

People are flocking to platforms like TikTok and platforms like Roblox because they feel like they can be themselves, express their creativity, and find others who share their values and interests.

Xbox has increasingly become an anti-social platform afraid to dip its toes into the oft-murky universe of social media, for better or worse. Roblox is bigger than all of Steam by the way.

And it's not because the games are good — it's because it's pure culture and restless memery. Given that Microsoft owns Minecraft, which offers similar social potential, you'd think they'd have gotten the memo.

It's the over-sanitization of Xbox and indeed other platform holders what's making them uncompetitive against more chaotic, admittedly potentially less scrupulous rivals. A change of mentality is needed, in my view, and it needn't come at the cost of safety.

Microsoft DOES NOT get social media, and is at the very apex of uncool.

TikTok is eating into gaming, but it doesn't need to be this way. Microsoft talks about it as if it's simply the result of a generational reality they can't compete with. I say, blaming TikTok is a cop out. Millions of people use Xbox on a daily basis, and there's no reason it couldn't be more social, if not even more social, than TikTok.

Microsoft had platforms within Xbox to facilitate this back in the day. Stuff like 1 vs. 100, the Netflix watch party system, social status and sharing feeds — all gone.

There's doubtless some way to keep users within the ecosystem even after they've finished a play session with their friends, and the obvious answer has to be social, in some form. I'm not paid enough to know exactly what that might look like, but it definitely doesn't look like throwing in the towel or tossing blame around.

Microsoft's ethos under Satya Nadella has been to basically decline to fully compete, and simply build tools and platforms for others to compete on top of instead.

The problem is, it's unwillingness to actually compete with companies within its own industry will preclude it from doing anything to actually grow the industry. Contradicting its own claims.

Nadella says innovation requires margins. Margins require customers, though. The next Xbox sounds like it could be more open than ever, but if they get it wrong, it risks becoming simply Steam-first PC gaming with extra steps.

If Microsoft truly wants to compete with TikTok, it can't keep running away from the mature social layers that its actual competitors are promoting and developing with rapidity.

It's not just about social features, though, Microsoft all up just isn't cool. There was a brief moment in history where Panos Panay and his slick Surface reveals made it seem like Microsoft was capable of being cool. Those days are gone now, and Xbox is suffering in the collateral, in my view.

I have absolutely no expertise or evidence to back this up, but in my humble opinion, I reckon the winner in future decades in gaming will be whoever manages to directly link their gaming platform to a more robust social layer.

That layer would potentially couple with video, and retain users inside the ecosystem even after gaming sessions are over. I'm not sure Microsoft is cool enough to even begin to explore that, but Steam sure might be.

Microsoft and OpenAI's multi-billion-dollar partnership can be viewed as both the best "tech bromance" in history and the most scrutinized/controversial partnership agreement. The tech giant $1 billion investment in the ChatGPT maker back in 2019 is arguably one of the smartest investments in the history of technology.

However, not everyone in the tech industry shares the same views. Following OpenAI's long-anticipated launch of GPT-5, Tesla CEO and billionaire Elon Musk claimed that the ChatGPT maker was going to eat Microsoft alive, potentially predicting its apocalypse.

Interestingly, OpenAI CEO Sam Altman and Microsoft CEO Satya Nadella seemed unfazed by Musk's claims. "You know, I don’t think about him that much," indicated Altman. "I thought he was just, like, tweeting all day [on X] about how much OpenAI sucks, and our model is bad, and, you know, [we’re] not gonna be a good company and all that.”

According to Nadella:

"People have been trying for 50 years, and that’s the fun of it! Each day you learn something new, and innovate, partner, and compete. Excited for Grok 4 on Azure and looking forward to Grok 5!"

Interestingly, Bill Gates was reportedly skeptical about Microsoft forming a partnership with OpenAI during its initial $1 billion investment in 2019 (now up to $13.5 billion). In a recent interview at the TPBN podcast, Microsoft CEO Satya Nadella revealed that securing board approval for the investment was initially challenging.

"Even at Microsoft, you kind of got to have to get a board approval to just go throw a billion dollars out there. But I must say it was not that hard to convince anyone that this is an important area and it's going to be risky."

Bill Gates was skeptical about Satya Nadella investing a billion dollars in OpenAI, owing to the AI firm was fairly new and had structured itself as a non-profit venture. "I think Bill even said, 'Yeah, you're going to burn this billion dollars,'" Nadella added.

However, despite the hesitation and unclear profit path, Microsoft moved forward with its plans and invested in OpenAI — a move that has since paid off dramatically.

Is Bill Gates still intimately involved in Microsoft's affairs?

A previous report suggested that Microsoft co-founder Bill Gates remains closely involved in the company's affairs, despite stepping away to focus on his philanthropic efforts. His advice is reportedly regarded as gospel, with Microsoft CEO Satya Nadella frequently relying on his guidance for the company’s transformative AI initiatives. Gates also played a pivotal role in cultivating the partnership between Microsoft and OpenAI, which has significantly contributed to the success seen in the field.

Even Salesforce CEO Marc Benioff predicted doom for the Microsoft-OpenAI partnership after the ChatGPT maker unveiled its $500 billion Stargate project designed to facilitate the construction of data centers across the United States. The executive indicated that Microsoft won't use OpenAI's technology in the future, which seems to hold some water following the launch of Microsoft's off-frontier custom AI models.

This news comes as Microsoft and OpenAI just announced a restructuring deal, which allows the ChatGPT maker to evolve into a for-profit venture. It's also worth noting that the restructure has also impacted Microsoft's ownership stake from 32.5% to 27% in the new public benefit corporation, which translates to approximately $135 billion.

Xbox isn't going anywhere. For now at least.

Microsoft's gaming division has had a difficult few months. Competition from other forms of entertainment, tariffs from the Trump administration, mass layoffs, and a sprint of contradictory strategy changes has stressed the Xbox brand. Sony's PS5 has thoroughly smashed the Xbox in global sales, forcing Xbox to put its flagship franchise, Halo, onto its arch-nemesis' platform.

Yet, Xbox soldiers on. There are still tens of millions of Xbox customers, many of whom subscribe to Xbox Game Pass, delivering stable on-going revenue for the platform. Microsoft's acquisition of Call of Duty, World of Warcraft, and Candy Crush has boosted the division's profitability, and made it larger than Windows itself by revenue. We reported exclusively this week that Xbox is slated to deliver a more open console next-gen, powered by full Windows 11, opening up access to PlayStation and Steam games via other storefronts, too.

Xbox's lead is Phil Spencer, but he answers to Microsoft CEO Satya Nadella, who rarely speaks on Microsoft's gaming business. In a new interview with TPBN, Nadella responded to interviewer's jokes about the "console war being over," describing how he sees the future of the Xbox business.

"You've got to remember, Flight Simulator was the first product Microsoft ever built, even before — Dev Tools was first, Flight Simulator was second," Nadella said. "Remember, the biggest gaming business is the Windows business. Steam has built a massive marketplace on top of it and has done a very successful job. The way we are thinking about gaming, first of all, we're the largest publisher after the Activision [acquisition.] We want to be a fantastic publisher, but we want to take a similar approach to what we did with Office. We want to make sure, whether it's consoles, PC, mobile, or cloud gaming, direct on the TV — we just want to make sure games are being enjoyed by gamers everywhere."

Satya Nadella went on to echo previous comments from Xbox Game Studios' lead Matt Booty and PlayStation alumni Shawn Layden, noting that short form video was gaming's biggest competition, rather than other gaming platforms. He also said he was "looking forward" to the next Xbox console, and said that ensuring Xbox has "good margins" is what will help them drive innovation ... but stopped short of explaining exactly what that innovation might look like, for now.

Microsoft is known to be working heavily with AI to deliver at least some of that innovation, with things like NPU-powered Auto Super Resolution upscaling slated to hit the Xbox Ally X some time next year. The next Xbox will also be more open than ever according to our sources, incorporating decades of Windows and Xbox games on a single device. Satya says that he wants to bring benefits to both Xbox and Windows PC gamers alike.

"Second, we want to do innovative work on the system side, on both console and PC. It's kind of funny that people think of console and PC as two different things. We built the console, because we wanted to build a better PC, which could then perform for gaming. I kind of want to revisit some of that conventional wisdom. At the end of the day, console has an experience that is unparalleled. It delivers performance that is unparalleled, that pushes, I think, the system forward."

"I'm really looking forward to the next console," Nadella said, "[and] what's next for PC gaming, but most importantly, the gaming business model is where we have to invent some new types of interactive media as well. Gaming's competition is not other gaming. Gaming's competition is short form video. So, if we as an industry don't continue to innovate both how we produce, what we produce, how we think distribution, the economic model — the best way to innovate is to have good margins. That's how you can fund [innovation]."

Satya likes to talk, but his track record for consumer products is weak

I'm not particularly confident in anything Satya Nadella says when it comes to consumer products. Nadella famously once said he wanted people to go from "using Windows, to loving Windows," and Windows is arguably less popular amongst consumers than it has ever been.

The lofty hardware requirements for Windows 11, glut of data-harvesting telemetry, aggressive bundled apps and services has made the entire Windows platform into a global pariah — at least outside of B2B circles Satya Nadella and shareholders obviously care more about. Satya Nadella seems unaware that PC gamers use Windows because they have no choice, and absolutely not because they love it.

It's in this consumer-hostile gulf that Xbox finds itself adrift, struggling to connect with the audience it spent over 10 years trying to repair a relationship with. Price hikes, aggressive layoffs, ditching all forms of platform exclusivity — it's all engineered to boost those margins Satya Nadella claims will deliver "innovation." What exactly will that look like for customers?

Microsoft has what seems to be a strong vision for Xbox's future. An open Xbox that can run all video games from all storefronts could be the panacea Microsoft needs to maintain some form of differentiation from PlayStation and the inevitable Steam OS console from Valve. There's a huge "if" attached to that vision, though. Xbox faithful today want a console experience first. They don't want to jump through driver issues, use the Task Manager, or connect a mouse and keyboard to access basic functionality.

The Xbox Ally is Microsoft's canary in the goldmine for this vision, but it's a rough experience as of writing. The only reason I'm writing this right now is because Xbox Game Pass Ultimate entitlement seems to be broken, so instead of gaming, I ended up checking Slack and seeing what work needed to be done. There were no error messages on my Xbox Ally to say that Microsoft was having issues, things simply wouldn't load, buttons simply didn't work, and the UI was locking up as the APIs couldn't connect to Microsoft's servers properly.

Earlier, I discovered that you can't run Halo Infinite on the Xbox Ally because the client simply evaporates while compiling shaders. Games like Death Stranding have also been abandoned by publishers in a broken state on the Xbox PC ecosystem. This is absolutely not the experience any console gamer wants to have. Microsoft is working hard to improve the experience, but Windows is a difficult beast to build on top of ... will they actually manage to pull it off?

Is Nadella's confidence a sign that Xbox is on the right path, or is he blissfully ignorant of the risks this strategy might have for Xbox's future? Time will tell, but Microsoft's history with consumer "innovations" is arguably not on Nadella's side.

Microsoft has had a great fiscal year, and for his trouble, CEO Satya Nadella is being compensated to the tune of $96.5 million, up about 22% compared to his $79 million last year.

While a lot of that compensation comes in the form of stock awards — about $84 million of it — the other $9.5 million is awarded in cash incentives, according to a proxy statement filed on Tuesday. The rest of the take-home is based on Nadella's standard $2.5 million salary before incentives and bonuses.

Nadella's windfall arrives in the wake of the AI boom that Microsoft has been so keen on driving with its hardware, software, data centers, and partnerships. In July, Microsoft became the second company to hit a $4 trillion market cap, following NVIDIA into the exclusive club.

While that number has fallen below $4 trillion in the months following, it's undoubtedly been a stellar year for Microsoft's revenue. According to Microsoft's 2025 Q4 earnings report, the company pushed its overall 2025 revenue to $281.7 billion, an increase of 15%.

Perhaps most notable was the impressive 34% revenue increase driven by Azure, which surpassed $75 billion in revenue for the first time. Much of that growth is based on meeting the ever-growing demand for AI compute power.

The proxy filing includes details regarding Nadella's AI-specific achievements:

• Strengthened our role in shaping the AI infrastructure wave, adding more than two gigawatts of capacity, increasing our global footprint to over 400 facilities across 70 regions, and making every region AI-first.
• Drove progress toward a utility scale quantum computer with the introduction Majorana-1, the first quantum chip powered by a topological core, marking a pivotal moment in quantum computing.
• Achieved double digit revenue growth (15% year-over-year), affirming our success at developing products and services our customers value.
• Furthered adoption of our family of Copilot apps, with Copilot apps surpassing 100 million monthly active users.
• Launched Azure AI Foundry, helping customers design, customize, and manage AI applications and agents at scale, supporting more than 70,000 customers, including 80% of the Fortune 500.

According to Microsoft's Compensation Committee, in a letter attached to a proxy statement, "Satya Nadella and his leadership team have positioned Microsoft as a clear artificial intelligence leader for this generational technology shift, enabling Microsoft to drive long-term growth through innovation, security, and quality."

Satya Nadella is Microsoft's third CEO, taking over for Steve Ballmer in 2014. Since his appointment, Nadella's pay has grown steadily. In 2015, for example, he took home about $18 million, a small sum compared to 2025's $96.5 million.

Nadella published an annual letter to shareholders at the same time as the proxy filing was made public, reiterating Microsoft's main goal in 2025:

"We must earn our permission to operate every day, in every country, every community, and every customer interaction. That’s why we remain grounded in our mission: to empower every person and every organization on the planet to achieve more."

2025 was a big year for Microsoft AI ... and Microsoft layoffs

It wouldn't be much fun to drool over these massive pay packages without acknowledging the fact that Microsoft has laid off a lot of employees in 2025.

The running tally at this point has climbed to more than 15,000 cut jobs, which began in January 2025 with layoffs across multiple sectors, including gaming and security.

In May, it was reported that Microsoft was cutting 3% of its workforce, targeting management. This resulted in roughly 6,000 jobs lost. In June, Microsoft cut another 305 Washington-based employees.

Following Microsoft's end of fiscal year in July, the company announced layoffs for 9,000 workers worldwide, affecting various "levels, teams, geographies, and tenure." And, finally, in September, more than 40 roles were axed in Redmond, Microsoft's home base.

In the grand scope of things, a company as big as Microsoft with around 228,000 employees is bound to suffer layoffs. Nevertheless, it's always a sad story, and it's entirely too common for a company raking in billions of dollars in revenue. But, as we all know, that's how capitalism works.

Earlier this year, Microsoft's CEO shared a public message on the Microsoft blog in which he expressed his "sincere gratitude to those who have left."

If you're wondering why CEOs like Nadella don't take pay cuts to offset layoffs, ex-Microsoft HR VP Chris Williams can offer some insight.

According to Williams, cutting executive pay wouldn't be enough to offset the gains achieved from layoffs. A company like Microsoft can incur up to a billion dollars in costs for about 10,000 employees, which is far more than someone like Nadella pulls in.

The $96.5 million compensation package is just that — a package, containing salary, bonuses, and stock options. Nadella takes home about $12 million outside of stock, which is far from enough to keep 15,000 employees behind a desk at Microsoft. I'm not making excuses for the layoffs; just demonstrating that it's a convoluted system of compensation.

As Windows Central Executive Editor, Jez Corden, remarked while discussing the long-term impacts of Microsoft's 2025 layoff spree, Microsoft's strategy of boosting stock price rather than providing high-quality products could come back to haunt the company.

It's big money now, but big money doesn't always last forever.

A week from now, Microsoft is set to officially cut support for Windows 10, leading to the single biggest jump in dumped computers. Of course, you can enroll in Microsoft's Extended Security Updates (ESU) program to continue receiving security updates for an extra year beyond the October 14, 2025, cutoff date.

To enroll in the program, you can either sync your PC settings to the cloud via a Microsoft account or pay $30 or 1,000 Microsoft reward points. However, Microsoft recently backtracked on the move, at least for users in the European Economic Area, allowing them to access the ESU program for free without meeting the requirements highlighted above.

Still, the Public Interest Research Group (PIRG) has filed multiple petitions asking Microsoft to reconsider its decision to end support for Windows 10. "Microsoft's new options don't go far enough and likely won't make a dent in the up to 400 million Windows 10 PCs that can't upgrade to Windows 11," PIRG's Lucas Rockett Gutterman.

At the beginning of this month, the group delivered a letter signed by 590 businesses, 83 state and local elected officials, 382 repair businesses and nonprofits from around the world, 19 libraries and school officials, and 49 environmental and consumer advocacy organizations asking Microsoft to reconsider cutting support for Windows 10. Instead, the group wants the company "to extend support for one of the world’s most popular operating systems."

It’s apparent that a large number of users are still running Windows 10 on their devices, which may be due to Microsoft’s strict hardware requirements for upgrading to Windows 11 or a general preference for Windows 10’s user interface over its successor’s flawed design elements.

While users in the European Economic Area will have access to Microsoft's ESU program due to their law, users in the US and other regions weren't as lucky. Repair.eu's campaigner Cristina Ganapini says Microsoft's move is a step forward, and proves that it's possible to extend support for Windows 10 beyond the set cutoff date:

“While this is a step forward for some Europeans with Windows 10 computers — and clearly evidence Microsoft could do this for everyone — it’s a just one-year pause, and some users still might not get the updates since they aren’t automatic. What we want is simple: for working computers to keep working, and not be left behind by Microsoft.”

The Restart Project, which helped co-develop the End of 10 Toolkit to help support Windows 10 users after Microsoft pulls the plug on the OS, seemingly echoed OIRG's sentiments, indicating that the ESU program feels like a last-minute snooze button, which only acts as a band-aid on a bleeding system.

Microsoft has been placed on the spot by critics claiming that the end of support for Windows 10 is programmed obsolescence, which will force millions of working PCs into early retirement.

To that end, it seems highly unlikely that Microsoft will extend support for Windows 10 beyond its end‑of‑support date and the ESU program. Either way, tick‑tock!

Last month, Microsoft reached a market capitalization of $4 trillion predominantly due to its multibillion-dollar investment in generative AI. Part of the tech giant's success can also be attributed to co-founder and billionaire Bill Gates' efforts in software development. While the company has greatly benefitted from its software development efforts, Microsoft CEO Satya Nadella recently highlighted his plans to move on beyond this strategy:

"When Bill founded Microsoft, he envisioned not just a software company, but a software factory, unconstrained by any single product or category. That idea has guided us for decades. But today, it's no longer enough."

Instead, the executive wants the company to shift focus to security, quality, and AI transformation as its core business priorities. Security doesn't come as a surprise, as the company has been increasing its efforts on this front for a while now, including holding top Microsoft executives accountable for cybersecurity by tying a section of their compensation packages to meeting the set security thresholds.

The AI bubble could be a pitfall for Microsoft

Over the past few years, Microsoft has been hit by major layoffs, with the most recent one impacting over 9,000 workers. This is despite Microsoft sharing its impressive earnings report for the quarter ending June 30, 2025, with $76.4 billion in revenue, which was up 18% year-over-year. The company attributed its massive gains to its cloud and AI business.

The layoffs have led to a shift in the company's culture, raising concerns among staffers, some under constant fear of being fired or replaced using AI as the company plunges billions into the technology (via The Verge).

Satya Nadella is under pressure to remain relevant in the AI space, as the goalposts in the ever-evolving industry keep shifting amid massive layoffs. However, Microsoft's partnership with OpenAI is seemingly fraying, especially after the latter announced its $500 billion Stargate project designed to facilitate the construction of data centers across the United States to support its AI advances.

This prompted Salesforce CEO Marc Benioff to claim that Microsoft won't use OpenAI's technology in the future. Microsoft's AI CEO, Mustafa Suleyman, confirmed that the company is developing off-frontier models, potentially suggesting that it's emancipating itself from an overdependence on OpenAI amid rising tension over for-profit evolution plans.

While Microsoft has invested up to $80 billion to build data centers this year, CEO Satya Nadella is seemingly concerned about the possibility of Microsoft becoming obsolete as it chases down the AI hype, something that keeps the executive up at night.

During a recent company town hall meeting, the executive revealed that he was "haunted" by the story of Digital Equipment Corporation. For context, the computer company enjoyed significant success in developing low-cost computers. However, it seemingly became obsolete as companies like IBM swiftly rose to the top, avoiding misplaced strategies in the early 1970s.

Perhaps more interestingly, the executive revealed that some of the employees who were laid off from Digital Equipment Corporation were hired by Microsoft and helped contribute to the development of Windows NT, which was launched in 1993.

Microsoft is in the crosshairs in the age of AI, struggling to maintain its relevance as arguably one of the most profitable companies in the world right now. Even Elon Musk is working toward giving Microsoft a run for its money with an AI simulation called "Macrohard," which will solely focus on developing software.

It remains unclear whether Elon Musk will be able to develop an iteration that attempts to compete with products like Microsoft Office. However, if AI unlocks this feat and renders some of these products obsolete, Microsoft CEO Satya Nadella says that he is ready to cut his losses:

"All the categories that we may have even loved for 40 years may not matter. Us as a company, us as leaders, knowing that we are really only going to be valuable going forward if we build what’s secular in terms of the expectation, instead of being in love with whatever we’ve built in the past.”

Do you think Microsoft should stick to its guns and continue chasing the ever-elusive AI hype or stick to what it does best? Share your thoughts with me in the comments.

Since last year, multiple reports have emerged alleging that OpenAI could be on the verge of bankruptcy, with projections of making a $5 billion loss within 12 months. This issue could be predominantly attributed to the ChatGPT maker essentially biting off more than it could chew by spending $7 billion on AI model training and an additional $1.5 billion on staffing.

As you may know, OpenAI has gone through several rounds of funding, raising $40 billion in its most recent, which pushed its market capitalization to $300 billion. However, this placed the AI firm under immense pressure from investors to evolve into a for-profit venture or risk losing funding if it doesn't make the switch by the end of this year, while simultaneously attracting outsider interference and potentially hostile takeovers.

More recently, a separate report emerged suggesting that OpenAI is getting ready to take Microsoft to court over anticompetitive business behaviour. The company further claimed that Microsoft was intentionally delaying the process while looking after its best interests.

OpenAI insiders claimed that "holding out is Microsoft's nuclear option," designed to protect its massive investment in the ChatGPT maker, but the software giant indicated that it was ready to walk away from the high-stakes negotiations and ride out the rest of its partnership through 2030.

However, a separate report claimed that OpenAI could prematurely declare AGI via an AI coding agent that surpasses the capabilities of an advanced human programmer — severing its ties with Microsoft. I honestly thought this would happen during GPT-5's much-anticipated launch, but Sam Altman admitted that the model is still missing several important things.

But as it now seems, OpenAI's plans to restructure into a for-profit entity could be pushed into next year amid high-stakes negotiation talks with Microsoft.

OpenAI's restructure could affect some key elements in the multi-billion-dollar agreement, which has already gone through multiple shakeups following the announcement of the ChatGPT maker's $500 billion Stargate project to facilitate the construction of data centers across the United States.

Microsoft already lost its exclusive cloud provider status, though OpenAI had previously indicated that the tech giant didn't meet its cloud compute needs, which could potentially cost it the coveted AGI benchmark to another rival.

If OpenAI and Microsoft reach a common ground before December 31, 2025, the ChatGPT maker can evolve into a for-profit, allowing investors to hold equity in the business while attracting larger and faster investments. However, people with insider knowledge about the high-stakes negotiations claim that Microsoft and OpenAI are unlikely to reach favorable terms before December 31 (via The Financial Times).

What's holding back OpenAI's for-profit evolution?

As pointed out by The Financial Times, Microsoft's exclusive access to OpenAI's API (Application Programming Interface) is reportedly holding back the company's technology because the AI models are hosted on Azure. The company reportedly wants to foster new partnerships with Google and Amazon Web Services to bump up its API sales, which currently constitute approximately a quarter of its current annual recurring revenue of $12 billion.

According to sources with knowledge about the negotiations, OpenAI will be able to sell its services to government entities that aren't on Azure. However, it remains to be seen how much impact this would make on the company's overall revenue.

The discussions also involve Microsoft's access to OpenAI's intellectual property, which allows it to see and learn how sophisticated AI models are trained or even use them in its tech stack.

AGI (Artificial General Intelligence) is also a major pressure point, as it can be used to sever the partnership. However, Microsoft CEO Satya Nadella reportedly wants to scrap the stringent clause from the partnership, potentially to continue accessing OpenAI's tech and IP beyond 2030.

OpenAI still wants to retain the clause in some shape or form. According to the source:

“OpenAI having the AGI clause is negotiating cheat. It’s a threat, but it’s more like mutually assured destruction because if it doesn’t go by year-end, they won’t be able to raise any money again and Sam [Altman] knows that.”

Elsewhere, a separate report claimed that Microsoft wanted a lion's share of OpenAI's business, which has directly contributed to the delayed evolution. However, Microsoft is OpenAI's largest investor, with a $13.5 billion investment in the business. Ultimately, the Redmond giant is expected to get between a 30 to 35% cut of the business, though it might be subject to change.

If OpenAI fails to make the transition into a for-profit, investors like SoftBank, which led its most recent round of funding, could withhold some of their investments or even ask for refunds.

Microsoft is arguably the world's most successful and profitable tech company, having recently unlocked $4 trillion in market capitalization ($3.84 trillion at the time of writing). This isn't just by sheer luck; hard work played an important role in the software giant's success.

But perhaps more interestingly, Microsoft co-founder Bill Gates admitted that he wasn't always confident that the company would succeed. "I wouldn’t say that I felt comfortable that we were successful until about 1998 or so," added Gates. This was 11 years after Microsoft had gone public, raising over $61 million in a single day.

What's more, the company's success had already propelled the executive into somewhat of an overnight billionaire. Recently, Microsoft revealed that over 1.4 billion Windows devices are currently in use, not forgetting the broad adoption of its Microsoft 365 productivity tools (including Microsoft Office) across organizations.

While Microsoft has stuck to the same formula to maintain its success, CEO Satya Nadella seemingly indicated that it might be time to shake things up and embrace a new strategy amid the fast-approaching AI evolution.

The company hasn't been shy about doubling down on its generative AI efforts following its multibillion-dollar bet on OpenAI and even deeply integrating the next-gen capabilities across its tech stack.

In a recent memo addressed to Microsoft employees, Satya Nadella indicated that even Bill Gates' revolutionary vision, which predominantly helped build the tech company and contributed to its immense success, might be obsolete in the age of AI.

As you may know, the company has been hit by major layoffs recently, impacting over 9,000 workers. They came despite Microsoft sharing its impressive earnings report for the quarter ending June 30, 2025. The company's revenue reached $76.4 billion, which was up 18% year-over-year, with a net income of $27.2 billion (up 24%). The report attributed the impressive gains to its lucrative cloud and AI businesses.

What does Microsoft's future hold?

In the ever-evolving tech trends, Microsoft is doubling down on security, quality, and AI transformation as its core business priorities. This keen focus on security doesn't come as a surprise.

The company has been making bold moves in the category since last year, when it highlighted its plans to start holding top Microsoft executives accountable for cybersecurity by tying a section of their compensation packages to meeting the set security thresholds. It also promised quicker responses and resolution to security threats.

As for AI, Microsoft is getting ready to deeply integrate the latest technology across its wide range of products and software. More recently, Microsoft CVP and Windows lead Pavan Davuluri gave us a subtle hint of what the future of Windows could look like, and as our Senior Editor Zac Bowden reported, this 'Windows 12' of sorts is labeled as "a truly ambient and multi-modal experience made possible by AI that will redefine our usage of computers."

Microsoft has already heavily integrated AI into its tech stack, especially Windows 11, which now ships with Copilot and next-gen features like Windows Recall and Live Captions. However, some of these features are exclusive to Copilot+ PCs, which the company has been promoting to get users to upgrade as Windows 10's imminent death approaches.

The company has faced backlash over Windows Recall despite its recent efforts to make it more secure. Users have blatantly described it as a security nightmare that has turned the software into a hacker's paradise, so there's still more work to do in terms of public perception around Microsoft's AI efforts.

Tesla CEO Elon Musk is arguably the harshest critic of Microsoft and OpenAI's multi-billion-dollar partnership. After stepping down from the ChatGPT maker's board in 2018, the billionaire has filed two lawsuits against the AI firm, citing "a stark betrayal of its founding mission" as it aims to evolve into a for-profit venture amid immense pressure from investors.

More recently, he filed another lawsuit against OpenAI, citing involvement in racketeering activities, with his lawyer blatantly indicating that the previous suit lacks teeth.

Following OpenAI's GPT-5 launch, Elon Musk warned that "OpenAI is going to eat Microsoft alive" while responding to Microsoft CEO Satya Nadella's post on X announcing the launch of the advanced model across the company's tech stack, including Microsoft 365 Copilot, Copilot, GitHub Copilot, and Azure AI Foundry.

However, Nadella seemingly brushed off Musk's claims with the following statement:

"People have been trying for 50 years, and that’s the fun of it! Each day you learn something new, and innovate, partner, and compete. Excited for Grok 4 on Azure and looking forward to Grok 5!"

Interestingly, OpenAI CEO Sam Altman doesn't seem to be fazed by Musk's comments. Speaking to CNBC, the executive indicated:

“You know, I don’t think about him that much. I thought he was just, like, tweeting all day [on X] about how much OpenAI sucks, and our model is bad, and, you know, [we’re] not gonna be a good company and all that.”

I honestly thought GPT-5 would end of Microsoft and OpenAI's tech bromance

A few weeks prior to GPT-5's launch, there had been a lot of hype and anticipation building with key figures like OpenAI CEO Sam Altman promising with "a high degree of scientific certainty" GPT-5 would be smarter than GPT-4, which he'd previously admitted "kind of sucks."

As you may know, OpenAI has been under immense pressure to evolve into a for-profit company or risk losing funding, outsider interference, and hostile takeovers.

However, multiple reports suggested that Microsoft (its largest investor with a $13.5 billion stake) was holding back the transition plans in a bid to protect its best interests. "Holding out is Microsoft's nuclear option," added an OpenAI insider.

This stirred up tension between the tech companies, but perhaps more concerning, OpenAI is reportedly getting ready to move to court over anticompetitive business practices.

However, Microsoft indicated that it was ready to walk away from the high-stakes negotiations and ride out the rest of the partnership through 2030. A separate report showed that OpenAI was getting ready to prematurely declare AGI (artificial general intelligence) to sever its ties with Microsoft, cutting its access to its tech and flagship AI models.

Last week, Sam Altman indicated that he was scared of GPT-5, citing that the model's advanced capabilities were outpacing oversight. While AI shows great promise, it hasn't unlocked levels that surpass human cognitive capabilities, but the hype around GPT-5 alluded to as much.

It's now been a little over 24 hours since GPT-5 shipped, and going by the posts shared across social media, users are less than impressed with its capabilities. Some users have indicated that OpenAI's decision to deprecate GPT-5's predecessors was miscalculated, citing that the model has degraded ChatGPT's user experience, which is reportedly rife with bugs and glitches.

A couple of weeks ago, I wrote an article about how Xbox had turned a corner, following a decent Xbox Showcase and a firm commitment to hardware. Speculation had been swirling that Xbox will hand off its hardware aspirations to OEMs like ASUS, leaving first-party hardware teams and customers facing an uncertain future. Microsoft's gaming financials don't always look healthy on the face of it either, putting a dark cloud over the entire platform.

How naive of me.

Yesterday, Microsoft unveiled that 9,000 were facing the axe, bringing the annual total to 15,300 or more. Many hundreds of those layoffs were at Xbox specifically, with cuts that seemingly fell indiscriminately across the entire portfolio.

Staffers who had been at Xbox for a decade or more, personally responsible for millions of dollars in revenue, got the cut. Legendary leaders at major studios were culled, projects were shut down, and in one case, an entire studio was closed.

There's a meme in the Xbox community about how "Xbox is dead" every five minutes, because of the non-stop roller coaster of changing strategies and inconsistent messaging Microsoft has foisted onto the customer base (and employees too) in recent years. Today, Microsoft announced that Helldivers 2 is coming to Xbox, and is the first-ever PlayStation published title on the platform. You couldn't really plan for more unfortunate timing. Xbox is dead, Xbox is alive, and so on. The thing is, this isn't unique to Xbox. It's applicable to every department at Microsoft all up.

As of this year, I've been covering the Xbox, Windows, Surface, Windows Phone, and Microsoft beat for ten years. I came in as an amateur blogger, just an Xbox fan, with little knowledge of the tech business or business in general.

I've learned a lot over the years, through all of the successes and mistakes, over-confidence and under confidence. Through it all, I'd always tried to hold on to fandom for Xbox for myself, the community, and the hobby in general — while remaining critical, and voicing the concerns of customers. We all rallied for bringing more Japanese games for Xbox, we called for boosted localization, and called for improvements to the Xbox PC experience. Microsoft delivered in varying degrees, but the staggering cadence of mixed messaging, changing strategies, and inconsistency is a disservice to both customers and employees alike.

I'm joining many others in feeling that under CEO Satya Nadella and CFO Amy Hood — being a "fan" for devs, potential employees, and customers alike — is becoming simply impossible. Microsoft as an entity feels directionless, changing strategies on a dime, and laying off thousands in its fickle wake.

Under Satya Nadella and Amy Hood, Microsoft has become a glorified investment bank, bereft of delivering innovation

Sources who remain anonymous due to lack of authority to speak on internal matters have pointed the blame for yesterday's mammoth layoffs firmly at Microsoft CFO Amy Hood. Hood's unrealistic fiscal expectations on Microsoft's subsequent divisions have created a culture of fear and doubt, ironically impacting productivity and thus profitability.

There's sentiment among Microsoft staffers that many of the layoffs revolve around a broadening shift towards artificial intelligence, with executives and activist investor groups at the top growing increasingly concerned that Microsoft is losing, or may have even already lost, the AI race.

It's well-documented that OpenAI and Microsoft's partnership is fractured, with OpenAI desperate to free itself from the restrictions its early investment deal with Microsoft have placed upon it. Microsoft enjoys exclusivity to various aspects of OpenAI's operation, including the first-right-of-refusal to hosting AI workloads, on top of revenue sharing requirements. OpenAI no longer grants Microsoft exclusive rights to hosting its services, however. And furthermore, all of these deals have an imminent expiry date: 2030. To that end, investors are nervous that all of Microsoft's AI "success" hinges solely on OpenAI, who is also bleeding talent to Meta at an alarming rate.

At this nascent stage, it's not unrealistic to think a major breakthrough at a competing platform, particularly at a company like Meta whose social apps remain globally dominant, could completely unravel OpenAI at a moment's notice. Microsoft's position in AI would evaporate overnight, conceding the future of computing to other tech companies.

Microsoft's home-grown AI products, many of which rely on OpenAI models anyway, are by and large complete trash in practice. Copilot is a stunted version of ChatGPT, the "Microsoft 365 Copilot" disaster is painfully limited in scope. Even bare-bones basics like generative erase in the Photos app pale in comparison to Samsung's, and Microsoft's internal efforts have nothing to show but tech demos and promises, with no real products.

The only "real" product Microsoft has put out so far, Windows Recall, is almost universally hated as a privacy nightmare made manifest, despite changes Microsoft has attempted to make. The Copilot+ PC range that its tied to has been nothing short of a spectacular flop, while sacrificing the Surface brand in the process.

There's sentiment that Microsoft executives and activist shareholders resent the idea that investment had fallen towards Call of Duty and Activision-Blizzard, instead of broadening their early AI investments.

Microsoft is set to invest a similarly mammoth-esque $80 billion in new AI-enabled training centers around the world to try and turn its fortunes around, but what if it had had $160 billion from having not purchased Activision? These latest layoffs are funding this refreshed attempt to chase an external innovation, and represent the human cost of Microsoft's poor planning.

Quick edit: since I wrote this, I saw that The Seattle Times has corroborated that these layoffs revolve around this $80 billion AI infrastructure investment, foisted on Xbox and other departments to account for the jitters around the potential failure of Microsoft's partnership with OpenAI.

Indeed, it's a testament to Xbox's leadership that it was able to convince Microsoft to invest in Activision when it had the chance, because I'd be willing to bet that Satya Nadella and Amy Hood would have sacrificed all of Xbox to chase AI without it.

Microsoft treats its consumer businesses like a utility, forgetting the human element

From Surface to Windows Phone, to Xbox and Windows itself, under Satya Nadella, Microsoft has utterly forgotten that real humans, customers, actually use its products. And seemingly, that real humans, actually build its products.

When the Windows Recall privacy PR disaster happened last year, I sat to myself thinking "how in the fuck couldn't someone have seen this coming?" It was literally the first thing I thought of when I saw that Microsoft was putting out an app that would creepily watch everything on your screen. It screamed of product design by spreadsheet — the "people use AI, so AI good" brainchild of a mindless boardroom meeting that nobody in the room was really paying attention to.

The entire Copilot+ PC range screams of this, utterly uninspired, underbaked and unthoughtful approach that has typified Surface since product architects Panos Panay and Ralf Groene were sadly driven out of the company, as Panay rebuilds his all-star team at Amazon instead.

Surface used to be at the cutting edge of hardware innovation, producing head-turning products that even Apple itself couldn't ignore. And sure, the execution wasn't always on point. Under Panos Panay, Surface had become a reliable fixture of Microsoft's product calendar, and drove a wave of innovation and improved designs across Windows' entire OEM portfolio.

In 2025, that's all but gone — a shell of its former self, with Microsoft using Surface as a vehicle to placate whatever latest tech fad Satya Nadella finds himself interested in at the time. There's nobody driving real innovation at Surface anymore, and it's sad.

Windows Mixed Reality, the "metaverse" buzzword from 2023, Windows Phone, Microsoft Band, even Microsoft's painfully slow efforts with Windows on Arm compatibility — under Satya Nadella, Microsoft has this strange and uncanny ability to put out loud PR beats and then utterly under-invest and thus, under-deliver.

We're seeing the same situation play out now with Copilot in slow motion, although that $80 billion investment is nothing to scoff at — it sounds like it's more about supporting other's services rather than Microsoft's own innovations. Microsoft Build events used to be a legendary confluence of developer passion and consumer product innovation, with exciting product reveals and service enhancements. Now, it's a dull parade of investor bait that typifies Nadella's approach to the company.

Therein lies why I say Microsoft is now more of an investment bank than a product innovator. Like locusts, Microsoft's fiscal approach has been to swarm into a section with money and acquisitions. Then, under-invest and under-deliver, subsequently ruin the product, and then bail when the next over-hyped tech fad opportunity rolls around. This is before we talk about things like cutting corners around security, leading to the unprecedented Azure email hack, among other things. There's a litany of examples of this dating back across my entire career, and even further back before it.

The brunt of this week's layoffs weren't in Xbox, but I don't see how Xbox can thrive in the corporate environment being constructed by Amy Hood and Satya Nadella, where investment mentality supersedes customer confidence, and employee wellbeing. But the cash keeps rolling in, so none of it matters, seemingly.

Microsoft as a company has no mission or ethos — perhaps it never did

I've been critical of Microsoft corporate for years, but Xbox enjoyed a bit of a bubble while Microsoft from the top largely ignored its operations. That was until Activision-Blizzard, of course.

My naivete as an modern Xbox fan hit a turning point during Summer Game Fest this year. For most of my career, to my knowledge, Microsoft had these Xbox FanFest events at its shows like Gamescom and E3, where dozens, and even hundreds of fans were invited to participate in events. Microsoft wilfully and actively engaged in curating community fandom in this way, and it has done so in the past with Windows Phone, Surface, and other products.

This year at Summer Game Fest, Microsoft had no Xbox FanFest of its own. But those who had been attending for years, and enjoyed the community and camaraderie, pooled and spent their own money to curate an Xbox FanFest event in LA. On the one hand, it was awesome to see the community rally, but on the other, it was utterly disappointing that Microsoft itself wouldn't spare the cash. Microsoft is approaching a 4 trillion-dollar market capitalization, with $22 billion in profits last quarter. They couldn't have spared a few thousand to put together an event for fans this year? Couldn't Satya Nadella have thrown a few dollars in from his $79 million stock awards package last year?

In among the mixed messaging over Xbox exclusives, the lack of clarity on Xbox's future — it was that that really didn't sit right with me. I'd tell myself it was all just a transition, with spending squeezed and playtime hours down ... The vast majority of gaming hours and spend sent into Fortnite and Roblox, and economic confidence hitting new lows. But then came this week's layoffs.

These latest layoffs seem utterly indiscriminate — an overly aggressive and reductive move purely aimed to boost margins at the cost of everyone and everything else. Entire teams wiped out, families left to wonder what their future would look like. People who'd given huge chunks of their lives, blood sweat and tears, toward helping make Microsoft shareholders and execs rich. Friends who'd worked together for years, and worked with devs, fans, and press for years — some of whom were personally responsible for millions of dollars in revenue that helped shareholders get richer.

I know it's not as if other companies haven't had layoffs, and I know that Xbox has things cooking. But I feel like it's in spite of Microsoft, rather than because of Microsoft. When you look at Microsoft's other products, like Windows 11, Surface, and even further back — the empty promises, the rug pulls, and broken promises, it screams to me of a company that simply isn't willing to take a risk, or give products the time they need to shine.

Microsoft as an entity no longer has any real direction, and no conviction, and crucially, no willingness to actually compete. Microsoft represents the apex of late stage capitalism, where failure is rewarded, and the ability to shift capital rapidly voids the necessity to deliver for consumers and society in general.

Microsoft increasingly just seems to go where other companies, true innovators, say the money is — looking for the next fad to devour and process, rather than curate and cultivate. How will Xbox, Surface, or Windows 11, grow without risk, investment, and curating consumer confidence? In a world where Microsoft has enough capital to just move wherever the wind is blowing, it simply doesn't seem to care. It doesn't have to be this way.

The brutality of these layoffs is just another symptom of a sick money-first mentality. But how can you stop it? Microsoft employs hundreds of thousands of people, none of whom deserve to be in this position either, and most of whom aren't paid well enough for their hard work. Most of whom simply want to do great things and create great experiences and art, as Microsoft corporate works their hardest to stop them.

Microsoft is a company that has no real mission or ethos anymore, and one that behaves more like a bank than a tech company, and it is certainly not one that deserves "fans." Maybe it never did.

In any case, Microsoft is making more money than God right now. So, I guess it just doesn't matter. And ... maybe it never did.

Investor pressure on OpenAI to evolve into a for-profit venture feels like it's at an all-time high, which is seemingly pushing its multi-billion-dollar partnership with Microsoft to the wall. Reports suggest that Microsoft is holding back the transition while it negotiates favourable terms that will protect its best interests.

As it happens, OpenAI CEO Sam Altman has finally broken his silence on the matter, revealing on the New York Times podcast that he recently discussed the future of OpenAI's partnership on a call with Microsoft CEO Satya Nadella (via Reuters).

According to Sam Altman:

"Obviously in any deep partnership, there are points of tension and we certainly have those. But on the whole, it's been like really wonderfully good for both companies."

Naturally so, Microsoft is OpenAI's largest investor with a $14 billion stake in the business. As such, it stands as the most affected since OpenAI plans to renegotiate some of the terms included in its original partnership agreement with Microsoft, including IP rights that could warrant access to its $3 billion Windsurf acquisition.

OpenAI further deemed Microsoft's reluctance to approve its evolution as anticompetitive business practices and could be moving to court. Microsoft is reportedly demanding a lion's share of OpenAI's new Public Benefit Corporation (PBC), which is well above what the AI firm is willing to offer.

A person with close affiliations with Microsoft revealed that Microsoft was stalling OpenAI's transition to maintain a healthy lead in the AI race, ahead of rivals like Meta and Google:

"Holding out is Microsoft’s nuclear option . . . and they are just making OpenAI sweat."

However, Microsoft claimed that it is happy with its current contract with OpenAI and that it is willing to walk away from high-stakes, for-profit negotiations, riding out the rest of the partnership till 2030.

If the ChatGPT maker's efforts to evolve into a for-profit entity prove futile by the end of this year, it could be subjected to hostile takeovers and outsider interference. Not forgetting the liability to return the $20 billion raised by investors during its latest round of funding, which pushed its market capitalization to $300 billion.

In the grand scheme of things, Satya Nadella indicated that he is looking forward to partnering with OpenAI for decades, even beyond its existing partnership agreement. "Every day that ChatGPT succeeds is a fantastic day for Microsoft,” Nadella added. Microsoft apparently makes money from ChatGPT's broad adoption and usage.

Generative AI keeps on evolving and advancing, scaling greater heights that are increasingly becoming difficult to fathom. While it is impossible to tell which direction the technology will take, most AI labs are seemingly fixated on one thing: AGI (artificial general intelligence).

For context, AGI is an AI system that surpasses human intelligence. However, Microsoft's approach to AI is seemingly different, at least according to CEO Satya Nadella.

During a recent interview, the executive indicated that he is less concerned about AGI. Instead, his focus is centered on using the next-gen technology to deliver real-world impact (via vitrupo on X).

Interestingly, Microsoft is arguably OpenAI's largest investor with a $13.5 billion stake, though SoftBank is also contending for the top spot, especially after leading the ChatGPT maker's latest round of funding, where it raised $40 billion, pushing the AI firm's market capitalization to $300 billion.

According to Satya Nadella:

"I think we as a society celebrate tech companies far too much versus the impact of technology. But honestly, if there was a more balanced way to talk about the use of technology instead of the tech industry."

Nadella talked about the amount of time spent developing technology that makes an impact on society, referencing Copilot's contributions in education. He further indicated that he joined the tech industry to deliver real impact to society using technology.

"The tech industry became the place we were celebrating ourselves and I just hate it," Nadella added.

What does Sam Altman think about AGI?

Microsoft's AI vision is seemingly tied to OpenAI because it predominantly depends on the ChatGPT maker's tech and models to power its AI advances. However, recent reports suggest that "the best techbromance in history" is fraying, with OpenAI building data centers across the United States to power its sophisticated advances via its exorbitant $500 billion Stargate project.

In the same breath, Microsoft is also developing its own in-house AI models and testing third-party models in Copilot. However, Microsoft's AI CEO, Mustafa Suleyman, indicated that the company's models might be 3 to 6 months behind OpenAI's latest entries.

He indicated that the company's strategy was to play a close second to OpenAI, citing that it would be cheaper.

Interestingly, a separate report suggested that Microsoft pulled out of two mega data center deals because it doesn't want to facilitate additional ChatGPT training support. However, OpenAI CEO Sam Altman indicated that the company was no longer compute-constrained.

Salesforce CEO Marc Benioff predicted that Microsoft won't use OpenAI's technology in the future following the ChatGPT maker's $500 billion Stargate announcement. However, Satya Nadella indicated that Microsoft is still committed to its AI vision and has already invested approximately $80 billion to build data centers by 2025.

Last year, Sam Altman indicated that OpenAI is well-versed in developing and achieving AGI, further claiming that the company is shifting its focus to superintelligence. He further indicated that AGI would be achieved within the next 5 years, though it would whoosh by with surprisingly little societal impact.

However, he recently shared a different account on X (formerly Twitter), indicating:

"I think we should stop arguing about what year AGI will arrive and start arguing about what year the first self-replicating spaceship will take off."

This news comes after Google's DeepMind CEO Demis Hassabis indicated that we're on the verge of achieving the coveted AGI benchmark. However, he warned that society isn't ready to handle all that it entails, and the prospects keep him up at night.

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.

Ever since Microsoft took a multi-billion-dollar bet on OpenAI's technology, the tech giant has seemingly shifted its focus to generative AI and practically integrated it across its tech stack.

At this point, Microsoft's CEO, Satya Nadella, is probably synonymous with AI, following his recent commitment to invest $80 billion in building data centers to support the company’s AI advancements. This comes after OpenAI unveiled its $500 billion Stargate project, aimed at reducing its reliance on Microsoft for cloud computing resources.

In case you missed it, the executive appeared in a podcast interview with Bill Gurley and Brad Gerstner, and as you might have guessed, most of the conversation was centered on AI. Perhaps more interestingly, Nadella indicated that the Agentic AI era might lead to the collapse of traditional SaaS (Software as a Service) business applications.

CEO of Microsoft Satya Nadella: We are going to go pretty aggressively and try and collapse it all. Hey, why do I need Excel? I think the very notion that applications even exist, that's probably where they'll all collapse, right? In the Agent era. RIP to all software related jobs. from r/agi

According to Microsoft CEO Satya Nadella:

“Yeah, I mean, it’s a it’s a very, very, very important question, the SaaS applications, or biz apps. So let me just speak of our own dynamics. The approach at least we’re taking is, I think, the notion that business applications exist, that’s probably where they’ll all collapse, right in the agent era, because if you think about it, right, they are essentially CRUD databases with a bunch of business logic. The business logic is all going to these agents, and these agents are going to be multi repo CRUD, right? So they’re not going to discriminate between what the back end is. They’re going to update multiple databases, and all the logic will be in the AI tier, so to speak. And once the AI tier becomes the place where all the logic is, then people will start replacing the back ends, right?”

The executive argued that AI agents are going to be "multi-repo CRUD." As such, they won't discriminate between what the backend is. Instead, they will update multiple databases. He further added that all the business logic users seek from traditional SaaS business apps will be available in the AI tier.

Microsoft CEO seemingly indicated that most SaaS apps provide simple yet valuable services. They store data and run CRUD (Create, Read, Update, and Delete) operations on them. This should ideally make it easy to integrate AI into the business app to handle the intelligence aspect.

"Hey, why do I need Excel?," indicated Nadella. "Like, interestingly enough, one of the most exciting things for me is Excel with Python is like GitHub with Copilot, right?"

The executive says users can use Microsoft Excel alongside Copilot. "It is like having a data analyst," added Nadella.

According to Microsoft's CEO:

"A great way to reconceptualize Excel. And at some point you could say, Hey, I’ll generate all of Excel. Uh, and that is also true. After all, there’s a code interpreter, right? So therefore you can generate anything. Um, and so, yes, I think there will be disruption, but so the way we are approaching at least our M365 stuff is one is, you know, Build Copilot as that organizing layer, UI for AI, get all agents, including our own agents."

To that end, it remains to be seen if users will embrace AI into their workflows, potentially prompting them to pull the plug on traditional SaaS apps.

Microsoft recently shared its latest earnings report for FY25 Q3, citing a 13% increase year-over-year, mainly due to its cloud, gaming, and AI services.

Over the past few months, investors and key stakeholders in the AI landscape have raised concerns about the tech giant's exorbitant spending on AI, stating that it's difficult to establish a clear profitability path in the seemingly volatile field.

At the beginning of the year, OpenAI unveiled its $500 billion Stargate project designed to facilitate the construction of data centers across the United States. The move raised questions about the future of Microsoft's multi-billion-dollar partnership with OpenAI. Even Salesforce CEO Marc Benioff predicted that Microsoft won't use OpenAI's technology in the future.

While Microsoft lost its exclusive cloud provider status for OpenAI, it retains the “right of first refusal,” making it the first option to host OpenAI workloads in its cloud infrastructure and services. The services will only be outsourced to other vendors if Microsoft can't meet the requirements.

However, OpenAI's mega Stargate deal didn't seem to faze Microsoft CEO Satya Nadella, who reiterated the company's plan to invest $80 billion in AI. And as it now seems, the commitment is paying off.

While sharing the company's impressive earnings report, the executive shed more light on its AI efforts and progress thus far. Interestingly, Nadella said the company's AI model performance is "doubling every six months" due to pre-training, inference, and system design (via Money Control).

According to Microsoft CEO Satya Nadella:

"Azure is the infrastructure layer for AI, optimized across every layer: DCs, silicon, systems software, and models to lower costs and increase performance.

We are delivering more performance per megawatt, lower cost per token, and faster dock-to-live times."

Last year, a damning report revealed Microsoft's troubles with its Copilot AI with insiders, including a senior executive referring to the tools as "gimmicky."

However, Nadella shares a different account, stating that Microsoft 365 Copilot is being used by hundreds of customers and is up 3X year-over-year. He added that customers have created over 1 million agents using SharePoint and Copilot Studio.

With the rapid emergence of generative AI and its broad adoption across the world, the definition of work is quickly changing. Organizations are quickly embracing the technology and integrating it across their workflows to make work easier by augmenting repetitive tasks, creating ample time for more meaningful tasks.

Interestingly, Microsoft is already using AI to write some of its code. During a recent fireside chat with Meta CEO Mark Zuckerberg at Meta’s LlamaCon conference, Microsoft CEO Satya Nadella indicated that 20-30% of the company's code is written by AI (via CNBC).

According to Nadella:

“I’d say maybe 20%, 30% of the code that is inside of our repos today and some of our projects are probably all written by software.”

Microsoft's CEO further indicated that the amount of code written by AI at the company could likely go up as the technology becomes more advanced. Interestingly, Nadella asked Zuckerberg how much of Meta's code is written using AI.

While the executive could spell out the exact amount, he indicated the Meta was developing an AI model with the capability to build future versions of the company's Llama family of AI models.

According to Mark Zuckerberg:

“Our bet is sort of that in the next year probably … maybe half the development is going to be done by AI, as opposed to people, and then that will just kind of increase from there.”

At the beginning of the year, Salesforce CEO Marc Benioff indicated that the company was seriously debating hiring software engineers in 2025, citing "incredible productivity gains" from agentic AIs. Meta CEO Mark Zuckerberg seemingly echoed similar sentiments, highlighting that mid-level AI engineers might claim coding jobs from professionals at the company in 2025.

NVIDIA CEO Jensen Huang had already predicted the paradigm shift in software engineering, claiming that coding might be dead in the water with the prevalence of AI. Instead, he recommended that the next generation should consider exploring alternative career paths in biology, education, manufacturing, or farming.

To that end, more tech companies are seemingly hopping onto the AI bandwagon and leveraging the technology to write code.

However, Microsoft co-founder recently indicated that AI could be on the precipice of replacing humans for most things, but biologists, energy experts, and coders would remain safe from the AI revolution because the fields are too complex to be fully augmented using AI,

Today, Microsoft has officially turned 50, marking decades of innovation and software development, and more recently, generative AI advances. At Windows Central, we've had a blast looking back at the tech giant's successes and failures over the past 50 years this week.

Our Senior Editor, Zac Bowden, recently predicted what Microsoft's 50th anniversary event will look like, including speculations that Microsoft might finally give a specific timeline when Windows 11's AI-powered features, such as Windows Recall, Click To Do, and AI in Search, would ship to broad availability.

While we'll have a clear account of what Microsoft plans to announce later today, Microsoft CEO Satya Nadella posted an interesting clip on X (formerly Twitter) and other social media platforms. I never thought I'd witness an AI-powered platform interview the Microsoft CEOs, including co-founder Bill Gates, Steve Ballmer, and Satya Nadella, but here we are.

I almost wouldn't tell that it's Microsoft Copilot conducting a seamless interview with such a great flow of thoughts and topics.

Perhaps more interesting than the intricate details of the interview, Copilot engaged all three CEOs in a comical "AI roast" session. As you might have guessed, Copilot took subtle jabs at each of the CEOs, starting with Steve Ballmer.

To Ballmer, Copilot touted his enthusiasm. "But do you ever worry that your energy might short-circuit the AI. I mean even robots need a coffee break after your pep talks."

Seemingly amused by Copilot's roast, Ballmer jokingly indicated that if AI could handle him, then it wasn't ready to handle the world's population. "We're counting on you," added Ballmer.

Microsoft's co-founder Bill Gates was next in line for the AI roast. "Now, Bill, you've got that signature thoughtful stare, but do you ever think the AI might feel intimidated by your intense thinking face?" indicated Copilot. "I mean, it's like it's waiting for a blue screen moment.”

While responding to Copilot, the philanthropic billionaire indicated:

“I hope so. I mean, that's all I've got left is these AIs get so damn intelligent. It's just that stare and my willingness to criticize that differentiates me.”

Steve Ballmer posed an interesting question to the AI chatbot, asking whether it could ever criticize Bill Gates. “Absolutely. Criticism is where growth happens,” Copilot indicated.

It concluded its roast session by throwing some jabs at Microsoft's current CEO, Satya Nadella, and his keen focus and obsession with AI. According to Copilot:

“Satya, AI seems to be your best buddy. But do you ever worry that your deep passion for AI could one day have it running the show, leaving you to just enjoy the ride?”

Copilot's comment seemingly echoed Bill Gates' recent prediction about AI replacing humans for most things. However, Satya Nadella indicated that we'd only get to that point when "AI can play like the best cricket player that I enjoy."

Interestingly, Bill Gates had previously indicated that humans would have the power to preserve some tasks for themselves, giving an example that no one would like to watch computers play cricket. “Touché, Satya. Let's see if it can hit a century in cricket, and then we'll talk. This has been a blast, gentlemen,” added Copilot.

Our Editor-in-Chief, Daniel Rubino, is on the ground at Microsoft's Redmond campus in Washington for its 50th anniversary and Copilot event with our live blog, covering all the announcements as they trickle in.

Be sure to keep tabs on that page for all the latest information and announcements!

Running a successful company like Microsoft for 50 years is no easy feat. As part of the challenges of operating a multi-trillion-dollar industry, several mistakes are made along the way.

For instance, Microsoft CEO Satya Nadella admitted that pulling the plug on Windows Phone at the height of its glory was a strategic mistake. While in an interview, the executive indicated that there were other plausible alternatives that the company could've embraced rather than culling the mobile division:

"The decision I think a lot of people talk about — and one of the most difficult decisions I made when I became CEO — was our exit of what I'll call the mobile phone as defined then. In retrospect, I think there could have been ways we could have made it work by perhaps reinventing the category of computing between PCs, tablets, and phones."

As Microsoft's 50th anniversary edges closer, I'm looking back at Microsoft co-founder Bill Gates' greatest mistake. In 2019, while speaking at an event with venture capital firm Village Global, the executive admitted that his greatest mistake during his tenure as Microsoft CEO was losing the mobile space to Android.

In every sense, Microsoft is arguably the best software development company, which is evident across its earnings reports. Building on this premise, the philanthropic billionaire claims developing an operating system similar to Android would've been "a natural thing for Microsoft to win."

However, Bill Gates indicated that Microsoft missed its opportunity with Android partly due to his mismanagement, coupled with anti-trust issues that capped the company's progression.

This gave Google the upper hand and competitive advantage over Microsoft, allowing it to acquire Android in 2005 and launch its first device in 2008. As you may know, Android is the most popular overall operating system in the world, predominantly because of its versatility and wide array of customization options.

Was Microsoft's Android fumble Bill Gates' fault?

More recently, Bill Gates was placed under fire by Android co-founder Rich Miner for whining about Microsoft losing mobile to Android. Miner indicated that he helped develop Android to prevent Microsoft from "stifling innovation" by controlling the phone like they did with PC.

For context, Miner was among the development crew that helped Orange launch the first Windows Mobile phone in 2002. According to Miner:

"So, sorry, Bill, you're more responsible for losing the $400B than you realize."

Bill Gates admits that were it not for his mismanagement, Microsoft would've seized the opportunity with Android and become the company.

According to the Microsoft co-founder:

"You know, in the software world, in particular for platforms, these are winner-take-all markets. So, you know, the greatest mistake ever is the whatever mismanagement I engaged in that caused Microsoft not to be what Android is, [meaning] Android is the standard non-Apple phone form platform. It really is a winner-take-all. If you’re there with half as many apps or 90% as many apps, you’re on your way to complete doom. There’s room for exactly one non-Apple operating system, and what’s that worth? $400 billion that would be transferred from company G [Google] to company M [Microsoft]."

To that end, Android stacks miles ahead of Windows with 45.53% of the market share compared to the latter's mere 25.36% (via StatCounter). It'll be interesting to see if Microsoft is able to catch up with Android, especially as Windows 10's end-of-support edges closer and a wave of backlash against Windows 11 grows stronger.

In 2023, Microsoft CEO Satya Nadella admitted that he'd never pictured Steve Ballmer or Bill Gates ever leaving the company while discussing his ascend to the top seat.

The executive revealed he'd never considered sitting at the helm of a Fortune 500 company, running its day-to-day operations. Nadella admitted that he was reluctant to take the position when a board member offered it to him.

He indicated he would only take the position if the board member genuinely wanted him to, but was informed that he "really needed to want to be CEO" to get the position.

In a recent interview, Microsoft co-founder Bill Gates said that Satya Nadella almost missed the opportunity to become Microsoft's CEO (via Fortune).

Satya Nadella almost didn't become CEO

Satya Nadella became Microsoft CEO in 2014, taking the mantle from Steve Ballmer and making the company among the world's most valuable companies with over $3 trillion in market capitalization.

The tech giant's immense success can undoubtedly be attributed to its recent AI and cloud computing efforts.

Interestingly, Nadella was backed by Bill Gates and Steve Ballmer to become the company's CEO. As you may know, Bill Gates left Microsoft in 2000 but continued to be a member of its board before fully transitioning to philanthropic efforts through the "Bill & Melinda Gates Foundation."

However, the billionaire is reportedly intimately involved in the company's affairs, with some insiders claiming "his opinion is sought every time we make a major change," including AI and recruiting high-ranking executives.

Gates admits that he was haunted by intrusive thoughts about Microsoft's future after he stepped down as CEO and was replaced by Steve Ballmer:

"I'll tear up on this, ’cause it meant a lot to me. I've had two successors, and boy, do I feel lucky because as I went off to do the foundation work, the one thing that plagued me was: Was I going to see the company fade in terms of its excellence?"

The Microsoft co-founder indicated that when Steve Ballmer announced his planned retirement, the board of members faced the difficult task of finding the perfect candidate for what might be considered the most complex CEO position in the world.

Bill Gates also took the opportunity to tout Satya Nadella's empathetic leadership style as Microsoft's CEO and its contribution to the company's overall success.

"I’ve come to value empathy more over the course of my career," added Gates. "Early on we were speed nuts, staying all night [at the office, thinking], 'Oh, you’re five percent slower as a programmer? You don’t belong here.' It was very hard-core."

There seems to be trouble brewing that could potentially drift Microsoft and OpenAI further apart. According to The Information, Microsoft is reportedly developing in-house reasoning models to give OpenAI a run for its money.

The report details that the software giant has been testing models from DeepSeek, Meta, and Elon Musk's xAI in Copilot, suggesting that the company might have further plans to sever its ties with OpenAI and its overreliance and dependence on ChatGPT.

This new development doesn't come as a surprise. Last year, a separate report detailed Microsoft's complaints about OpenAI's technology across its tech stack.

It suggested the Redmond giant could be moving away from OpenAI's AI products, the GPT-4 model, because it's too expensive and isn't fast enough to meet its enterprise customers' requirements.

Microsoft and OpenAI share a complicated partnership. As you may know, the Redmond giant made a multi-billion dollar investment in the ChatGPT maker, making it OpenAI's exclusive cloud partner for its AI advances.

However, this clause changed shortly after OpenAI unveiled its $500 billion Stargate project, designed to facilitate the construction of data centers across the United States. Microsoft holds the “right of first refusal" and remains the first option to host OpenAI workloads in its cloud infrastructure and services.

It's worth noting, OpenAI can outsource the services from other companies if Microsoft is unable to meet the requirements. Salesforce CEO Marc Benioff predicted Microsoft won't use OpenAI's technology across its tech stack, including Copilot, in the future because it's too expensive and isn't fast enough.

Microsoft has been placed under fire for its recent Copilot update, which has seemingly degraded the service's user experience. Microsoft staffers have blatantly branded the upgrade "a step backward."

As you may know, Microsoft's partnership with OpenAI dictates that the tech giant retains the right to use the AI firm's intellectual property. However, OpenAI is seemingly remaining tight-lipped about how it developed and trained its o1 reasoning model.

Microsoft AI CEO Mustafa Suleyman previously requested OpenAI employees to provide documentation about o1's development. However, his request was blatantly turned down.

Salesforce's CEO claims, "Mustafa Suleyman and Sam Altman aren't best friends." He attributed his deductions to last year's Davos conference, where both executives were on the panel. He claimed that they seemed uneasy around each other, potentially highlighting friction between Microsoft and OpenAI.

The once-considered "best tech bromance" has seemingly turned into a "winner takes it all" competition between Microsoft and OpenAI. Microsoft is reportedly planning to sell access to its in-house reasoning model (dubbed MAI) to developers, taking on OpenAI dominance in the AI landscape.

OpenAI's AI strategies are unrealistically expensive

Over the past few months, multiple reports have emerged indicating that OpenAI was on the verge of bankruptcy, with projections of making a $5 billion loss within 12 months.

However, the ChatGPT maker survived the bankruptcy claims after key stakeholders, including Microsoft, NVIDIA, Thrive Capital, and SoftBank raised $6.6 billion through a round of funding, pushing its market cap well beyond $157 billion.

Interestingly, market analysts and experts predict that OpenAI might still be in trouble, predicting that Microsoft could acquire the AI firm within 3 years.

A recent report highlighted OpenAI's potential plans to hike the cost of its next-gen AI models with PhD-level reasoning and thinking to $20,000 per month.

The report brewed controversy among the community, with some indicating that they'd rather wait for DeepSeek to distill the model and provide a similar iteration for free. Perhaps the highlighted changes in OpenAI's model pricing could be a bold attempt to meet the exorbitant cost of developing and training AI models.

This is especially true, as investors are mounting pressure on OpenAI to evolve into a for-profit entity, following the latest round of funding. This will help the company keep outsider interference and hostile takeovers at bay.

As you know, OpenAI's attempt to transition has received backlash from multiple parties, including Elon Musk (who helped co-found the firm). The billionaire has already filed two lawsuits against the firm, citing a stark betrayal of its founding mission and alleged involvement in racketeering activities.

While Musk's bid to block OpenAI's evolution into a for-profit entity was recently denied, other aspects detailed in his suit can proceed to trial.

Elon Musk recently offered to buy OpenAI for $97.4 billion. However, OpenAI CEO Sam Altman quickly turned down the offer, indicating the company and its mission aren't for sale.

With the emergence of generative AI, AI-powered tools like Copilot, ChatGPT, and more are quickly gaining broad adoption.

As a result, there's been a dramatic shift, especially in how people interact with information on the Internet, thanks to the emergence of AI-powered tools like OpenAI's ChatGPT search.

OpenAI CEO Sam Altman recently revealed that he's using ChatGPT more than ever as it seemingly evolves into a so-called 'Everything App.'

"I don't do Google searches anymore," added Altman.

A new study highlighted by our sister site, Tom's Guide, echoes the same sentiments. According to a survey featuring 510 participants in the US and an additional 518 in the UK conducted by our parent company, Future Publishing, approximately 27% of the US participants are heavily inclined to use AI-powered search tools like ChatGPT as conventional tools like Google seemingly fade away into the horizon.

AI specialist Amanda Caswell attributes the dramatic shift to well-curated, in-depth, and contextual answers delivered with a more human-like tone in a straightforward set of apps that save time, are easy to use, and offer personalization for added accuracy and relevance.

Interestingly, a separate study by Gartner seemingly corroborates Future's findings, citing that AI-powered tools like ChatGPT search will take over 30% of online search queries by 2026, potentially denting Google's longstanding search dominance.

It'll be interesting to see how companies at the forefront of the dramatic shift to AI tools for online search queries handle abound issues, including the rampant erroneous AI-generated summaries.

Satya Nadella could make up for Microsoft's Google transgressions with Copilot AI

"We missed what turned out to be the biggest business model," indicated Microsoft CEO Satya Nadella while speaking to Dwarkesh Patel during a recent interview.

The executive admitted that Microsoft underestimated search which ended up being one of the company's biggest mistakes.

Nadella admitted that the company's initial thoughts about search were that it would remain decentralized, but this wasn't the case, giving Google the ultimate opportunity to grasp dominance in the landscape with a significant lead and precision.

"Who would have thought that search would be the biggest winner in organizing the web?" he added. "We obviously didn't see it, and Google saw it and executed it super well."

As the next generation of web users seemingly takes on new trends like scouring the web with AI tools, Microsoft could attempt to crack Google's search dominance with Copilot.

Like OpenAI's ChatGPT, Microsoft's AI offerings ship with similar capabilities, allowing users to pull fast and intricate (if sometimes imperfect) responses to queries.

However, the company may have to address multiple concerns raised by users following its recent massive Copilot overhaul. Microsoft 'Insiders' cited that the upgrade shipped with a degraded user experience and was "a step backward."

If Microsoft can address some of its most pressing issues quickly and thoroughly enough, it could have a standing chance to take on OpenAI's ChatGPT as users ditch Google for AI-powered tools.

Microsoft CEO Satya Nadella was recently interviewed by Dwarkesh Patel. In the hour-long session, the executive discussed the tech giant's recent quantum breakthrough, AGI (Artificial General Intelligence—a type of artificial intelligence that aims to perform any intellectual task that a human can do. Unlike narrow AI, which is designed to perform specific tasks, AGI would possess the flexibility and adaptability of human intelligence), and more.

Right off the bat, Nadella revealed that Microsoft is "very email heavy." As such, he receives a handful of emails he must respond to.

He painted a picture of a future where Copilot agents can automatically scheme through the email and populate drafts for his perusal. This could alleviate mundane tasks while simultaneously saving time, as they'd only need to review and send the AI-generated drafts.

Nadella foresees the development of an agent manager, where users can manage all the agents and their dialogue via a unified user interface.

Satya Nadella on superhuman intelligence and legal barriers

"Do you think we're headed towards superhuman intelligence in your time as CEO?" asked Patel. While referencing Microsoft AI CEO Mustafa Suleyman's use of superhuman intelligence, Nadella indicated that we'd need to establish trust with the "new species" first.

According to the Microsoft CEO:

"Before we claim it is something as big as a species, the fundamental thing that we've got to get right is that there is real trust, whether it's personal or societal level trust, that's baked in. That's the hard problem."

The executive admitted that the legal approach to the ever-evolving AI landscape could be the "biggest rate limiter." He indicated that this would become more apparent as AI tools gain broad adoption and humans delegate more authority to them.

As AI agents scale greater heights and seemingly take on complex tasks, Satya Nadella says there's a threshold they need to meet before being allowed to run a Fortune 500 company.

Satya Nadella's thoughts and beliefs on AGI

The Microsoft CEO blatantly indicated that he had a problem with how people loosely defined AGI. This comes after news of Microsoft's AGI definition was revealed via its multi-billion partnership deal with OpenAI.

According to the fine print, OpenAI will only achieve AGI after developing a sophisticated AI system capable of generating up to $100 billion in profit.

Microsoft CEO Satya Nadella indicated:

"That's why I make this distinction, at least in my head: Don't conflate knowledge worker with knowledge work. The knowledge work of today could probably be automated. Who said my life's goal is to triage my email? Let an AI agent triage my email."

Delving deeper into the AGI discussion, Nadella claimed that AGI milestones don't necessarily dictate AI progressions. “Us self-claiming some AGI milestone, that’s just nonsensical benchmark hacking to me,” the executive added.

Microsoft CEO Satya Nadella highlighted the company's broader plans to double down on building compute infrastructure to help train the next big model. This is after OpenAI unveiled its $500 billion Stargate project to facilitate the construction of data centers across the United States for its AI advances.

The emergence of DeepSeek's ultra-cost-effective AI continues to raise concern among major AI firms, including Google. Recently, Demis Hassabis, DeepMind CEO, urged employees not to worry about the Chinese AI startup, citing Google's superiority in the AI landscape (via CNBC).

Hassabis shared the sentiments during an all-hands meeting in Paris where Alphabet CEO Sundar Pichai read aloud a question from a company employee. The question heavily leaned on lessons and implications Google could learn from DeepSeek's seemingly "overnight success."

For context, DeepSeek launched its R1 V3-powered open-source model, prompting NVIDIA's market share to plummet by a whopping $600 billion in a single day. A research paper claims the model surpasses OpenAI's proprietary o1 reasoning model across a wide range of capabilities, including science, math, and coding. However, perhaps more concerning is that the Chinese AI startup reportedly unlocked these impressive feats at a fraction of the cost of developing proprietary AI models.

However, Google's DeepMind CEO Hassabis quickly watered down DeepSeek's success as "exaggerated," especially after keenly examining the details. The executive claimed the model training cost reported by DeepSeek is probably "only a tiny fraction" of the total cost incurred. He further indicated that the Chinese startup used more hardware.

This news comes after a separate report suggested that DeepSeek spent $1.6 billion and bought 50,000 NVIDIA GPUs to facilitate the development of its AI model.

According to Google DeepMind CEO Demis Hassabis:

“We actually have more efficient, more performant models than DeepSeek. So we’re very calm and confident in our strategy, and we have all the ingredients to maintain our leadership into this year.”

The executive subtly indicated that Google holds a significant lead over DeepSeek in the AI landscape but admitted that it's "the best team" to come out of China, which should be taken seriously. However, he cited that DeepSeek is riddled with security with security and geopolitical concerns, which may stunt its progress, hindering the startup from realizing its full potential.

Read more: DeepSeek hit by large-scale cyberattack

Did Google miss its opportunity with AI?

As generative AI scales greater heights, it's increasingly difficult to tell who will win the race. Well, according to AI safety researcher Roman Yampolskiy:

"If you have enough money to buy enough compute, you could build AGI today."

While Yampolskiy's sentiments pose an interesting theory, Microsoft CEO Satya Nadella doesn't think Google will be in the running to become the leader in AI. Last year, the executive indicated that Google had all the potential and resources to become the default leader in AI but failed. According to the executive:

"Google's a very competent company and obviously they have both the talent and the compute. They're the vertically integrated player in this. They have everything from data to silicon to models to products and distribution."

This prompted Alphabet CEO Sundar Pichai to throw a lethal jab at Microsoft's AI efforts, indicating:

"I would love to do a side-by-side comparison of Microsoft's own models and our models any day, any time. They're using someone else's models."

The CEO was referring to Microsoft and OpenAI's multi-billion partnership, which grants the Redmond giant access to next-gen AI models while the latter gains computing power and funding.

Microsoft's CEO touted DeepSeek's AI as "super impressive". "We should take the developments out of China very, very seriously," Nadella added.

Last week, Microsoft released its financial results for Q2 FY25, reporting a 12% growth in revenue, which translates to approximately $69.6 billion. The Redmond giant's Commercial Cloud segment revenue, including cloud services sales, saw a 21% growth in revenue, translating to $40 billion. Its intelligent cloud business saw $25.5 billion in revenue.

Microsoft leverages its cloud services to power its AI efforts. However, investors are seemingly concerned about the company's exorbitant spending on AI, especially with the emergence of DeepSeek's ultra-cost-effective AI model, which was developed at a fraction of the cost of proprietary models like ChatGPT and Copilot.

Interestingly, Microsoft CEO Satya Nadella sees the emergence of DeepSeek's R1 AI model and other iterations as good for business amid Azure's slow growth rate. According to the executive:

"AI will be much more ubiquitous. And so, therefore, for a hyperscaler like us and a PC platform provider like us, this is all good news as far as I'm concerned."

OpenAI and SoftBank announced their $500 billion commitment to the Stargate project, which will facilitate the construction of data centers across the United States for sophisticated advances. Microsoft CEO Satya Nadella revealed that the company spends up to $80 billion annually to build Azure.

Microsoft employees encouraged to stay the AI course 

In a leaked internal memo seen by Business Insider, Microsoft chief financial officer Amy Hood urged employees to remain focused and build toward the company's AI goals.

According to Hood:

"There has been a lot of AI-related news this week, but our focus is clear: delivering real-world AI solutions while simultaneously globally scaling our cloud and AI infrastructure to support our partners and customers as they adopt, build, and grow as well. As a company, we remain steadfast in the priorities which are required to deliver on that product promise — security, quality, and AI innovation. Thank you for your focus as we work together for our customers who rely on us."

This isn't the first time Microsoft has been placed on the spot for its exorbitant spending in AI. Last year, investors questioned the company's spending on AI, raising concerns over the little profit returns from its ventures in the landscape. Reports suggest that Microsoft is struggling to establish growth in the category, with consumers showing little interest in its Copilot AI monthly subscription service plan — Copilot Pro.