Microsoft has a problem: nobody wants to buy or use its shoddy AI products — as Google’s AI growth begins to outpace Copilot products

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As a researcher observing Microsoft under Satya Nadella, one consistent theme has emerged: a struggle to truly connect with their customer base. It seems they haven’t quite figured out how to effectively relate to the people they serve.

As a long-time tech follower, I’ve noticed Microsoft has been quietly scaling back its retail presence for a while now, and it feels like they’ve been chasing whatever the latest shiny object is. It’s been a bit of a rollercoaster – from blockchain to the metaverse and now AI. Honestly, it seems like Satya Nadella is struggling to focus, and I’m starting to see the effects of that lack of clear direction. It’s a little concerning, because Microsoft is usually so solid.

A new report in The Information reveals that Microsoft is facing challenges with its AI initiatives. Forecasts and sales targets for its Azure AI offerings have been lowered, reportedly because salespeople are having trouble finding customers. While Microsoft disputes the claims, market data suggests that Google’s Gemini is rapidly gaining ground.

Recently, we reported that OpenAI, the company powering Microsoft Copilot, was facing a critical situation. Their chatbot, ChatGPT, is now lagging behind Google’s Gemini in its ability to solve problems, and a new image generator called Nano Banana is significantly better than OpenAI’s own DALLE.

OpenAI is facing increasing questions about its financial sustainability and is accumulating significant debt. This creates a growing problem for Microsoft, which has heavily invested in OpenAI and now risks having a large portion of its business tied to a potentially failing venture.

FirstPageSage AI Chatbot Usage Chart (December 3, 2025)
# Generative AI Chatbot AI Search Market Share Estimated Quarterly User Growth
1 ChatGPT (excluding Copilot) 61.30% 7% ▲
2 Microsoft Copilot 14.10% 2% ▲
3 Google Gemini 13.40% 12% ▲
4 Perplexity 6.40% 4% ▲
5 Claude AI 3.80% 14% ▲
6 Grok 0.60% 6% ▲
7 Deepseek 0.20% 10% ▲

Despite a lot of evidence showing that advanced AI tools need so much human help that they aren’t worth the cost, Microsoft appears to be moving forward with flawed designs.

Rumor has it that OpenAI plans to release new versions of ChatGPT soon, possibly to compete with Google’s Gemini. I believe Microsoft faces bigger challenges, as they’ve been actively working to address concerns about their own products under Satya Nadella’s leadership.

A new report from SEO and analytics firm FirstPageSage shows Google Gemini quickly gaining ground on Microsoft Copilot in the AI market. While ChatGPT is still the leading AI model, Gemini is now outperforming it and is on track to overtake Copilot in the coming months.

Google’s AI advantages are accumulating, as Microsoft’s disadvantages snowball

Microsoft is falling behind because they haven’t focused enough on what their customers actually need. While Satya Nadella points to the company’s size as a reason for slow innovation, it feels like a convenient excuse. It seems Microsoft has prioritized pleasing investors over satisfying customers and supporting employees, and this short-sighted approach could leave them struggling if AI truly transforms computing.

Microsoft currently relies heavily on expensive NVIDIA technology to power its data centers, while Google is focused on building everything in-house. Microsoft has been quick to add AI features to its products, sometimes before they were fully developed, whereas Google has taken a more deliberate and considered approach. While Microsoft initially gained investor enthusiasm by quickly launching AI features, by 2025, Google’s AI products are expected to be more polished and user-friendly.

I use AI features on both Google Android and Microsoft Windows every day, and I’m noticing a significant difference between the two. Google’s features, like the photo editing tools on Pixel phones, are much more advanced than Microsoft’s Photos app. Also, Google Gemini in apps like Gmail and Docs feels smarter and easier to use than Copilot in Microsoft 365, based on my experience using both at work.

Microsoft’s tendency to release AI products quickly and address problems later could lead to those products being seen as unreliable, much like older versions of Internet Explorer.

Gemini is surprisingly useful and can handle everyday tasks. For example, you can ask it to “find a meeting time on this date for these time zones,” and it will actually do it. Microsoft’s Copilot 365, however, can’t even schedule calendar events using simple language on the mobile Outlook app, and sometimes doesn’t even provide clickable links. At least the Xbox Gaming Copilot is labeled as a beta, explaining its frequent failures. It’s really strange that Microsoft released these features in such an unfinished state. And now they want to make Windows 12 heavily reliant on AI? I seriously doubt that’s a good idea.

Microsoft’s tendency to release AI products quickly and fix problems later could damage their reputation, potentially leading to a similar outcome as the widely criticized Internet Explorer. They seem to be prioritizing cheaper, less refined AI options (like Microsoft Teams) over the higher-quality, more expensive products offered by competitors. It’s unclear if this approach will succeed with AI, given the significant costs of running these systems.

Microsoft made a smart move by investing in OpenAI early on, which initially gave them a significant advantage. However, as AI technology matures, some weaknesses are becoming apparent. Many of Microsoft’s current AI products feel disjointed and lack a clear strategy, though their AI solutions for businesses are performing well. GitHub Copilot has been a notable success, and Microsoft is working on its own AI chips (Maia and Cobalt) and language models to reduce its reliance on NVIDIA and OpenAI. Despite these efforts, Microsoft, under Satya Nadella, has a history of not fully realizing the potential of promising projects.

If Microsoft doesn’t prioritize developing its own high-quality AI technology, it risks becoming just a reseller of NVIDIA hardware, which would drive up energy costs without offering significant innovation. While investors might be satisfied with this arrangement, it would be a disappointing outcome for a company once known for its groundbreaking advancements.

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2025-12-08 16:12