Microsoft’s CEO Steps Into Product Mode as Copilot Faces Intensifying AI Competition

Satya Nadella is back in product mode — and clearly frustrated. After stepping away from Microsoft’sMSFT

commercial role to focus on AI, he criticized Gmail and Outlook connectors, saying they “for the most part don’t really work” and are “not smart,” while conceding Google’sGOOGL

Gemini is ahead at certain tasks. The gap is glaring, with ChatGPT and Gemini far outpacing Microsoft’s Copilot in user adoption.

• UCLA Anderson purchased 50 Office 365 Copilot seats, but CIO Howard Miller said “there aren’t a ton of takers” and suggested the school may cut subscriptions next year.
• GitHub Copilot is also losing ground to rivals like Cursor and Devin, with Goldman Sachs shifting roughly 10K seats to competing tools.

Code red reality: Nadella’s turn comes as enterprise customers question Copilot’s real value. Sioux Falls Mayor Paul TenHaken said the city likely won’t renew, noting that “the value prop has to be incredible” when free tools like ChatGPT exist. Even as Barclays and UBS roll out 100K+ seats each, Nadella is personally grilling engineers and recruiting talent from OpenAI and Google DeepMind to halt Copilot’s erosion before rivals pull further ahead.