Microsoft has made a bold move, fully embracing the artificial intelligence (AI) landscape. However, its “AI-first” approach has yet to yield the anticipated results and may even be undermining its flagship offerings. A lack of clear branding and insufficient synergy across its product lineup have left users frustrated. Its AI chatbot, Copilot, is falling behind rivals in the market, with a notably low adoption rate among enterprise clients. While Microsoft has managed to sell 15 million “seats” for Microsoft 365 Copilot, its user base is actually shrinking—some companies are using only around 10% of the seats they’ve subscribed to. Customers are voicing concerns over confusing product versions and inadequate integration.

Interestingly, Copilot’s usage rate within Microsoft itself has risen. The latest earnings report reveals that while Microsoft’s net profit has increased, its expenses have also ballooned. Moreover, the revenue growth rate for its Azure cloud computing division has slowed, further fueling investor anxiety over the company’s AI investments.