Microsoft, a $3 trillion company, has lost its early lead in the artificial intelligence race despite its partnership with OpenAI and $13 billion in investments, with the stock price dropping 34% over five months after an all-time high. Less than 4.5% of Microsoft’s 400 million Microsoft 365 customers subscribe to Copilot, and the chatbot lags far behind ChatGPT, Gemini, and Claude in usage. The company’s fragmented organizational structure with separate consumer and enterprise teams, combined with tensions with OpenAI over computing capacity and intellectual property, contributed to this setback. The exodus from GitHub Copilot to Cursor and Claude Code, and the launch of Claude Cowork by Anthropic, triggered a market rout known as the SaaSpocalypse, wiping $2 trillion off tech valuations. In response, Satya Nadella reorganized the company in March 2026 by merging consumer and enterprise Copilot teams, placing Jacob Andreou in charge of Copilot Experience, and securing a 27% equity stake in OpenAI upon its restructuring.
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