$Microsoft(MSFT.US)Dow Jones Chinese Local Language News Microsoft's key AI products face major problems MSFT Feb 03,2026

As Microsoft's close partnership with Microcof) nn weakens, Microsoft's Conilot chatbot has become the core of the company's artificial intelligence (AI) strategy. But efforts to make Copilot a ChatGPT alternative have been tough.

Current and former employees who worked in Microsoft's AI product division said confusing brand positioning and interoperability issues have frustrated users. According to data seen by The Wall Street Journal, only a small fraction of Microsoft enterprise suite users use Copilot, and in recent months, the proportion of users who prefer Copilot over Google's Gemini or other tools has declined. For Microsoft, this is a big deal because Copilot is at the heart of CEO Satya Nadella's push to transform Microsoft into a priority company, just as he transformed it into a cloud-first company about a decade ago. Current and former executives said Copilot is one of Nadella's top priorities.

Microsoft's stock plunged after it released earnings last week, sparking investor concerns that growth in its most important division, Azure cloud computing, is slowing, while also worrying that Microsoft's business relies on Copllot's unproven performance. Microsoft shares fell nearly 3% on Monday, with software stocks broadly lower as renewed concerns emerged that AI tools would reduce the need for corporate paid subscriptions. In a blog post last December, Nadella wrote of AI, "We've moved past the initial discovery phase," adding that the industry is entering a phase where "we begin to distinguish" hype from "substance."

Even though Microsoft is currently lagging in the chatbot race, it continues to make huge profits from AI-driven cloud computing demand, remaining one of the world's most valuable companies. Analysts believe the company is well-positioned to close the gap because its productivity software has hundreds of millions of enterprise users who can easily promote new AI products.