Microsoft restructures AI division to chase superintelligence after Nadella once called AI models a commodity

Microsoft is restructuring its AI division to double down on its own AI models, all the way up to superintelligence. That's a notable shift from what the company used to say.

The Copilot teams for commercial and consumer customers are being merged into a single organization with four areas: Copilot experience, Copilot platform, Microsoft 365 apps, and AI models. Jacob Andreou, who previously ran product and growth at Microsoft AI and before that at Snap, will step in as Executive Vice President of Copilot Product Experience, reporting directly to CEO Satya Nadella. A new Copilot leadership team will handle strategy and product coordination across the board.

Suleyman shifts focus to superintelligence

Mustafa Suleyman, head of Microsoft AI, is going all in on building extremely capable AI models and chasing "superintelligence." According to Suleyman, these models will improve products across the company over the next five years while bringing down the direct costs of running large-scale AI services.

Nadella says progress on AI models will matter more than ever for Microsoft over the next decade, since they underpin Copilot and, by extension, much of the company's product lineup. Nadella previously argued that AI models would become commodities; going from there to superintelligence is a striking change in tone. His latest comments suggest the company now sees proprietary model development as a strategic priority.

We are doubling down on our superintelligence mission with the talent and compute to build models that have real product impact, in terms of evals, COGS reduction, as well as advancing the frontier when it comes to meeting enterprise needs and achieving the next set of research breakthroughs.

Satya Nadella

So far, Microsoft's homegrown AI models haven't been much of a factor in the race. The company unveiled large models from its internal "MAI" series for the first time in August 2025, but they fell short of the competition.

AI model providers want to be platform layers, and that's a problem for Microsoft

There's likely another factor driving this move: large model providers increasingly aim to position their services as a kind of "AI operating system," a layer that takes over and standardizes more and more work inside apps, including Windows. Anthropic is already pushing this kind of platform play with Claude Cowork. Microsoft moved fast and shipped its own version of the concept with "Copilot Cowork," adapting Anthropic's technology.

But that creates a real dependency risk. If an outside model controls the processes inside your software, you're handing over control of a critical layer. In a worst-case scenario, Microsoft could find itself unable to act independently on a core piece of its own software stack.

Nadella has been openly critical of Copilot's current capabilities internally, telling engineering managers that integrations connecting Copilot with Gmail and Outlook "don't really work" and are "not smart." He reportedly took an unusually hands-on role in fixing these issues, posting detailed critiques in internal Teams channels and grilling engineers in weekly meetings.