It’s the end of an era at Microsoft: Frank X. Shaw, the executive who oversaw the tech giant’s communications for nearly three decades, first at an external agency and for the last 17 years as one of its senior leaders, is leaving at the end of the year.

Shaw, 64, said he’s not retiring, although he doesn’t have another job lined up. He plans to stop working for a while, do some of the things he hasn’t had time for, and then decide what’s next.

“I have had a ringside seat at some of the biggest leadership, technology, and business transformations that have ever taken place,” Shaw said, sharing the news of his departure (under embargo) in a phone call Thursday afternoon. “I just feel incredibly fortunate.”

He said he had been discussing his potential departure for some time with Takeshi Numoto, Microsoft’s chief marketing officer, looking for the right moment.

Microsoft has not announced a successor for his role as chief communications officer. In a LinkedIn post, Shaw said the company will consider internal and external candidates.

A statement from Shaw’s colleagues in corporate communications credited him for his many years shaping Microsoft’s “voice and reputation with intelligence, candor and wit. His leadership and contributions to the company are too extensive to list, as is the number of journalists who have, at one point or another, used his name in vain.”

A former Marine Corps public affairs officer, Shaw has worked with all three of Microsoft’s CEOs. He started on the agency side, at Waggener Edstrom — now known as We. Communications — when Bill Gates was still running the company.

He built his reputation defending and advocating for Microsoft through some of its hardest stretches: the antitrust years, the Windows Vista backlash, the scramble to replace Steve Ballmer as CEO, and the weekend in 2023 when OpenAI’s board fired Sam Altman.

As the company’s top communications executive, he has also told the story of Microsoft’s reinvention under CEO Satya Nadella, from the LinkedIn and Activision Blizzard deals to an AI push that has carried Azure past $100 billion in annual revenue.

Evolving with technology: Shaw has spent much of his career closely watching the tech landscape and moving Microsoft’s voice into new channels as they emerged.

“We’re always thinking about what is the art and science of communications,” Shaw told PRWeek. “How do we reach our audiences most effectively in a changing environment?” He called the arc from print to radio and TV to social media and newsletters a “constant evolution of influence.”

He turned the corporate blog into a place where the company argued its own case, writing “Microsoft by the numbers” himself in 2010 — a stat-by-stat comparison against Apple and Google that TechCrunch dubbed “fantastic passive-aggressive.”

He and his team experimented with different and risky methods of telling the company’s story, holding mass briefings under embargo and publishing documents known as the “Book of News” in advance of its major keynotes and conferences. The prospect of a reporter having to answer to “fxs” was no doubt a factor in ensuring the news (mostly) didn’t leak.

Shaw hired Steve Clayton out of a technical role at Microsoft in London, where he had been blogging about the company unofficially out of frustration with how it was perceived, and made him chief storyteller. In the middle of the AI boom, Clayton and Shaw embraced the analog undercurrents in popular culture and launched Signal, a quarterly Microsoft print magazine for business leaders.

Clayton was VP of communications strategy by the time he left in January to become chief communications officer at Cisco, making Shaw’s planned departure the second high-profile exit from Microsoft’s comms team in a year.

Adapting to AI: In recent years, Shaw made his own team a testing ground for AI, publishing what worked and what didn’t. In a 2023 post he described using Copilot in Teams to pull story ideas out of conversations with spokespeople and anticipate coverage after interviews, and asking the AI to “poke holes in a statement we’re making on a tricky topic.”

He called it his corporal, a reference to Napoleon, who was said to bring one to meetings and ask whether his generals’ war plans made sense to him. A survey of 80 people in Microsoft’s communications and marketing organization found 84% did not want to go back to working without it.

Shaw was also known to use AI as a sounding board when a story frustrated him, offering him an objective take before he called and let a particular reporter have it.

He announced his departure Friday morning in a message to Microsoft’s communications team (reminding them he’s still there for a few months yet) and his public post on LinkedIn.

“Thank you as well to all the reporters, editors, writers, influencers and analysts who have put up with me over this time, enduring my early and late night calls, my off the record ‘no comments,’ my bad story ideas and my extended commentary on headlines and positioning,” he wrote.

“You all have incredibly hard and valuable jobs,” he added, “and while I’ve not agreed with everything said about us 😊 I appreciate you anyway.”

Amazon is adding the Activity Feed and other features from its Quick desktop app to the AI assistant’s mobile apps for iOS and Android.

The Activity Feed is the signature feature of Amazon Quick. It combines email, Slack messages, calendar invites and CRM updates into one prioritized list, and lets people act on items (opening and responding to emails, for example) without switching apps.

Amazon said Wednesday that the Quick desktop app, released in preview in April, is now generally available on Windows and macOS. The company also said Quick’s agents now run in the cloud, so they keep working after a laptop is closed and deliver results to the feed.

The desktop and mobile apps now sync, as well, so a task started on a laptop can be picked up on a phone, for example.

Quick has a free tier, with paid individual plans starting at $20 per user per month billed annually, and business plans running $20 to $40 per user per month.

Quick is Amazon’s entry in a crowded market for AI assistants at work, competing with Microsoft Copilot, Google Gemini, OpenAI, Anthropic and others. Amazon’s announcements cited business customers for Quick including Southwest Airlines, LabCorp and the PGA Tour.

The desktop app came together fast, as part of a new effort inside Amazon to use small teams to move quickly: Swami Sivasubramanian, the AWS vice president of agentic AI, told GeekWire in June that a team of about six engineers started in late January and shipped April 28.

Microsoft Copilot and Google Gemini offer different paths beyond Claude, with ecosystem fit, governance, pricing, and workflows shaping the choice.

The post Best Claude Alternatives for Business: Microsoft Copilot vs Google Gemini in 2026 appeared first on TechRepublic.

Microsoft Copilot and Google Gemini offer different paths beyond Claude, with ecosystem fit, governance, pricing, and workflows shaping the choice.

The post Best Claude Alternatives for Business: Microsoft Copilot vs Google Gemini in 2026 appeared first on TechRepublic.

I often open an Excel spreadsheet and wonder what has changed since the last time I used it. Sometimes I've made the changes myself and simply forgotten what I did, and other times, someone else has edited the workbook. Either way, figuring out what happened can mean digging through the spreadsheet's history.

Microsoft was sued Friday by the parent company of its hometown daily newspaper, The Seattle Times Co., which joined with Newsday to accuse the Redmond tech giant and OpenAI of using their journalism to train artificial intelligence models.

The lawsuit alleges that the companies scraped hundreds of thousands of Seattle Times and Newsday articles — bypassing paywalls and ignoring terms of service — to train their AI models. It seeks financial damages and the destruction of any training datasets and models built with their content.

“Like a snake eating its own tail, GenAI that is trained on painstakingly researched, expensive-to-produce content threatens to destroy the very news organizations by competing directly with them through AI-generated substitutive content,” the suit says. “If Defendants are allowed to succeed, independent journalism of the kind Plaintiffs produce will struggle to survive.”

The case is notable in part because the Seattle Times is suing two of its own funders. Microsoft Philanthropies underwrites some Seattle Times journalism projects. In 2024, Microsoft and OpenAI jointly funded a $10 million Lenfest Institute AI fellowship that included both the Seattle Times and Newsday among its inaugural participating newsrooms. The Times says it maintains editorial independence.

A Microsoft spokesperson said in a statement Friday evening, “While we’re surprised by the lawsuit, we appreciate the importance of the Seattle Times to our region and we’re always happy to sit down and explore solutions to this type of dispute.”

It’s not clear if there were negotiations or licensing talks in advance of the suit. GeekWire has contacted The Seattle Times Co. for comment.

In its own coverage of the lawsuit Friday evening, the newspaper quoted a memo from Seattle Times Co. President and CEO Alan Fisco, saying: “This was not an easy decision. However, we feel strongly that we must defend our content — which we spend millions of dollars a year to produce — from being used without our consent or compensation.”

The Seattle Times Union, which represents more than 160 newspaper employees, said Friday it supports the lawsuit but that in ongoing contract negotiations the company has refused to guarantee it won’t replace non-reporter newsroom jobs with AI.

“If the Seattle Times Co. truly cares about the threat AI poses to journalism’s business model, it should protect the workers who produce the copyrighted material at the heart of this case,” the union said in a statement.

Fisco, a longtime Seattle Times executive, took over as CEO on Jan. 1, succeeding Frank Blethen, who led the paper for 40 years and remains chair of the board. Ryan Blethen, Frank Blethen’s son and a fifth-generation member of the family that has owned the paper since 1896, became publisher in the same transition.

The complaint Friday includes examples of ChatGPT reproducing Seattle Times and Newsday journalism nearly word for word, including an 88-word verbatim stretch from The Seattle Times’ Pulitzer-winning coverage of the Boeing 737 MAX crashes, generated when a user prompted the chatbot with just the article’s headline and web address.

The suit echoes The New York Times’ 2023 copyright case against the same defendants, which just this week drew a U.S. Justice Department brief siding with Microsoft and OpenAI, arguing that a ruling for the publishers would stifle American AI development.

The newspapers join a growing list of publishers suing OpenAI and Microsoft over AI training. In addition to the New York Times, that includes the New York Daily News, Ziff Davis and the Center for Investigative Reporting, all consolidated before U.S. District Judge Sidney H. Stein in Manhattan.

On Friday, the publishers in that case moved for summary judgment, as did OpenAI and Microsoft.

OpenAI has struck licensing deals with more than a dozen other outlets, including The Associated Press, News Corp and Axel Springer. Publicly disclosed terms of three of those deals top $300 million, according to the Seattle Times complaint.

Updated with statement from The Seattle Times Union.

This week on the GeekWire Podcast: What should Liverpool FC fans expect from Jeff Bezos as a member of the storied English Premier League club’s new minority ownership group? We consult the Amazon leadership principles for the answer.

Plus, a tip and an SEC filing lead to a scoop on a former Meta AI director’s new startup, the GeekWire Editorial Board convenes to decide whether Dave Clark’s Auger stays on the GeekWire 200 after moving its HQ to Dallas, and Microsoft quietly semi-retires its AI blob.

Related Stories and Links

Bezos and Liverpool FC

• Group including Jeff Bezos buys minority stake in Liverpool FC, with option to become controlling owner — CNBC
• Liverpool: FSG sell minority stake to Amazon founder Jeff Bezos-backed consortium led by Amit Bhatia — Sky Sports
• Bezos, Bhatia buy a stake in Liverpool: What does it mean for the club and FSG? — ESPN
• Bezos, Bhatia, Saverin buy Liverpool stake at $7 billion valuation — Sportico
• The Redmen TV — independent Liverpool FC fan channel

Noosphere and the Form D

• Ex-Meta AI research director raises $10.25M from Trilogy and Madrona for stealth physical AI startup
• Kevin T. Carlberg — founder’s research site

Auger and the GeekWire 200

• This former Amazon exec is moving his startup’s HQ to Texas, and he has a few notes for Seattle
• Dave and Leigh Anne Clark move Auger headquarters to Dallas — D Magazine
• GeekWire 200
• Seattle Engineering Centers
• New map traces Washington state’s tech ‘universe’ to a few key hubs, and shows what’s at risk
• ‘We can’t become callous’: KIRO hosts debate what a startup’s departure to Texas says about Seattle’s business climate — MyNorthwest

Microsoft and Mico

• Farewell, Mico: Microsoft’s cute little AI blob is going the way of Bob
• Microsoft starts merging its Copilot consumer and business apps in advance of ‘Super App’ rollout

Subscribe to GeekWire in Apple Podcasts, Spotify, or wherever you listen.

Microsoft's Copilot apps are combining into a single experience, with Podcasts, Deep Research, and Group Chat being retired along the way.

Microsoft has spent decades putting characters into its software and then sending them off into retirement. Now joining Bob, Clippy and Cortana in the great recycle bin in the sky: Mico. 

The animated artificial intelligence blob (a derivation of “Microsoft Copilot”) arrived last October in Microsoft’s Copilot Fall Release, described as “expressive, customizable, and warm” — an optional presence that “listens, reacts, and even changes colors to reflect your interactions.” 

Less than a year later, Microsoft is pulling Mico from Copilot’s core voice experience as part of the merger of the Copilot consumer and business apps, announced Thursday morning.

But maybe it’s more accurate to call this a semi-retirement, for now: Mico is expected to live on in some of Copilot’s education features, according to the company.

Mico reflected a bet Microsoft made about consumer AI under Mustafa Suleyman, the DeepMind and Inflection co-founder who joined as CEO of Microsoft AI in 2024: that the way to win users away from ChatGPT was warmth and personality, not just raw capability. 

It didn’t turn out that way. In March, Microsoft handed oversight of Copilot to Jacob Andreou, a former Snap executive, and narrowed Suleyman’s role to building AI models. Andreou told his organization in July that Copilot should focus on “real work” and be “optimized for outcomes.”

Microsoft has been here before, repeatedly. 

• Microsoft Bob, released in March 1995, replaced the Windows program manager with a cartoon house — click the wall calendar to put something on your schedule, click the pen to write a letter, etc. — guided by a yellow dog named Rover.
• Clippy, officially Clippit, debuted with Office 97, offering unsolicited help with whatever it thought you were doing, e.g., “It looks like you’re writing a letter. Would you like help?” For many, the answer was no. Microsoft switched the Office Assistant off by default in Office XP and removed it entirely in Office 2007.
• Cortana, named for the Halo video-game AI and voiced by the same actress, arrived on Windows Phone in 2014 and Windows 10 the following year. Microsoft retired the standalone Cortana app in 2023 to make way for Copilot.

That’s not to mention Tay, the chatbot Microsoft pulled within a day in 2016 after users taught it to post racist messages, or the less-official Sydney, the AI alter ego that surfaced during early Bing Chat testing in 2023 and famously told New York Times technology columnist Kevin Roose it loved him and that he should leave his wife. 

So farewell, Mico. It could have been a lot worse.

Microsoft is starting the process of combining its consumer and business Copilot apps into one, laying the structural foundation for an upcoming “Super App,” and trying to turn the company’s sprawling artificial intelligence brand into a unified product that people actually use. 

The move is part of the company’s effort to better compete with ChatGPT, Gemini and Claude, attempting to turn its legacy in workplace technology and cloud infrastructure into a stronger position in AI apps and agents. 

It also recognizes the blending of business and personal lives, and the reality that many people use the same AI assistants for both home and work.

The Copilot unification, detailed Thursday in support documents from the company, will take place gradually over the next several weeks, bringing major changes for some existing users. 

Several features of the consumer app are going away starting on Aug. 18, including Copilot Podcasts, Group Chat and Deep Research. Also disappearing is Mico, the expressive blob introduced less than a year ago to accompany the consumer Copilot’s voice mode, although Microsoft expects it to live on in some of Copilot’s education features. 

Commercial users will see far less change, with Microsoft calling them mostly cosmetic. For example, the Microsoft 365 Copilot app will be known simply as Microsoft Copilot, with a new icon and a new web address.

The unified app is a key step for the company, but it is not, on its own, the launch of the Super App. That larger move will bring together Copilot’s chat, AI coding, Cowork and new AutoPilot agents into a single app. Microsoft CEO Satya Nadella told investors on the company’s July 29 earnings call that the Super App will be out this quarter, meaning by the end of September.

The broader initiative is an attempt to remake and unify Copilot under Jacob Andreou, the former Snap executive Nadella put in charge of the product in March. Mustafa Suleyman, the DeepMind and Inflection co-founder who had run Microsoft’s consumer AI efforts since 2024, shifted to a narrower role at the time, focused on developing new AI models. 

Andreou detailed the move in a memo to his 11,000-person organization in early July, as reported by The Information, citing the need to move on from features that weren’t gaining traction, and “earn and respect the right to exist in our customers’ lives.” 

Microsoft said last month that Microsoft 365 Copilot surpassed 30 million paid seats, up from 20 million in April, with net seat additions more than doubling quarter over quarter. That amounts to just about 7% of the more than 450 million commercial Microsoft 365 paid seats the company reported in January. 

Microsoft doesn’t disclose how many people use the consumer Copilot app, but Sensor Tower estimated 38.5 million monthly users in July, a fraction of ChatGPT’s 1 billion monthly users.

Here is more on what Copilot users can expect:

Gradual rollout: Migration will begin this week with a small group of Windows Insiders and will expand more broadly next week. Worldwide rollout will start with mobile and web in mid-August; Windows and Mac apps will follow in mid-September. Users will see the change at different times, and Microsoft says that’s expected. Mobile users will need to download an updated app.

Unified app and name: The consumer and commercial apps will become a single app called Microsoft Copilot, with a refreshed icon. The commercial web address will move from m365.cloud.microsoft to copilot.cloud.microsoft, with automatic redirects beginning in late August.

Work and personal will stay separate: Users will be able to sign in with a personal account, a work or school account, or both, and switch between them in the app.

Microsoft says data won’t flow between the two, employers won’t be able to see personal activity, and enterprise security, compliance and administrative controls will remain unchanged.

Chats and content will persist: Chat history, images and other content created in the consumer app will migrate to the new one. Files shared with or generated by Copilot will move to OneDrive, where additional storage requires a paid plan.

Deep Research will get only a partial replacement: Deep Research generates long, detailed reports by searching the web and pulling sources together. It’s being retired for consumers, and the substitute, a similar tool called Researcher, will be available only to subscribers of Microsoft 365 Premium, a higher tier than the Personal and Family plans.

Personal and Family subscribers will still be able to open their old reports from chat history and save them to Word, but won’t be able to create new ones.

Podcasts and Group Chat will go away: Group chat threads, messages and the images created in them will disappear after Aug. 18. Copilot podcasts — the AI-generated audio discussions the app made from websites and uploaded documents — will need to be downloaded individually from the podcast library before then.

Some features will be temporarily unavailable: Copilot Health may be missing for some consumer users mid-migration. Microsoft says it will return, and that heavy Health users will be migrated later so the feature will be waiting when they arrive.

Free limits may tighten: Microsoft says core Copilot chat will stay free “subject to capacity and limits,” but that some users will hit those limits sooner than they do today. Those who do can buy a paid Microsoft 365 plan, such as Personal or Family, which come with higher usage limits.

Implications for IT departments: Recall, the Windows feature that periodically captures screenshots of a user’s activity for subsequent AI searching, can be configured to leave certain apps out of those screenshots. Organizations that excluded the old Copilot app will need to apply that setting again to the new one. The exclusion won’t carry over automatically. 

Editor’s Note: This story has been updated since publication to clarify which features may be temporarily missing during the transition, after Microsoft revised the information it provided.

GeekWire is profiling over the next few weeks some of the people and teams that are shaping the evolution of Microsoft in what we’re calling its “Microsoft 2.5” era.

The Copilot Super App cat is only partially out of the bag. Sometime in the coming weeks, Microsoft will launch its entry into the AI “super app” space, company officials have said. But Microsoft hasn’t talked much about what the coming Copilot Super App will include beyond a few of the top-level experiences that are meant to unify and organize consumer and business users’ access to key Microsoft AI properties.

Executive Vice President Charles Lamanna is part of the inner circle known as the Copilot Leadership Team that is spearheading the Super App effort. He also oversees building out and securing the back-end services that will power the Copilot Super App.

As head of Copilot, Agents, and Platform, Lamanna has a lot of responsibility for someone who has been with Microsoft for “only” 13.5 years. He has actually been with the company a bit longer than that, as he has done three tours at Microsoft: He first interned for Windows Live OneCare, then returned in 2009 to work on message-filtering services. He rejoined Microsoft when it bought his cloud performance-management startup MetricsHub Inc. in 2013. He worked as an engineering manager on Azure, then ran the Power Platform and Dynamics 365 teams, before assuming his current role in March 2026.

Lamanna says he emphasizes three things with his team: Be customer-obsessed; get things done by having a “total ownership mindset”; and be kind, not jerks.

Every six months, he writes a “State of the Business” paper for the team, in which he outlines their priorities. In addition to focusing on changing how people work — from tooling, technology, budgeting and organization perspectives — he emphasizes the importance of keeping “the crown jewels” of Office and Microsoft 365 up, reliable and secure.

“There’s going to be a massive surge of demand on the back end (Microsoft 365) because of agents. They’re nonstop,” said Lamanna during GeekWire‘s interview with him this week.

While the Super App itself will likely be free (like the Copilot App today), the services it exposes will likely not. The company has been moving toward usage-based pricing with its AI products, the way it already has with GitHub Copilot and Microsoft 365 Cowork. That kind of model makes sense for the company in a world where always-on agents, not the number of users, drive a lot of the demand.

He also said his team needs to be at the frontier for AI products. “We need to have AI startup and lab characteristics but with Microsoft sensibilities,” he said.

Lamanna made a similar case publicly this week, asserting in a LinkedIn post that “the most important thing my team will do this year won’t be any single product or feature we ship” but rather changing how the team works.

Reining in the Copilot-Palooza. Despite the rise of agents and all things “agentic,” Copilot is still Microsoft’s top priority, Lamanna said. Microsoft’s goal is for Copilot to be a truly personal AI assistant that will know how you work, the apps you use, the processes and workflows that matter to you, and more.

“We had some missteps because we fragmented,” he acknowledged. “It’s like we had a consumer Copilot and we have like a commercial Copilot and we have GitHub Copilot and yeah — ‘Copilot Palooza’ is what I call it internally.”

This is where the coming Copilot Super App fits in. Microsoft wants it to be a single destination that brings the key Copilots together on the work and home fronts.

He said to think of the Super App “almost like a browser or an operating system.” In the same way a browser might have a bunch of different tabs, or Windows a bunch of different apps, the Super App will be the home for Code, Chat, Cowork and Autopilots, or always-on agents. Microsoft is expecting that users still will go directly to apps when needed, but it’s working to make Copilot the first app people boot into and live in, similar to the way many do today with Outlook or Teams, he said.

Microsoft’s goal is to wire into the Super App even more of its core franchises over time. Dynamics 365, its CRM and ERP offerings, are morphing into a set of agents that connect to Dynamics Model Context Protocol (MCP) servers, which connect AI models to back-end data. The plan is to integrate those Dynamics agents into the Super App.

The company also is in the midst of integrating the Dataverse storage and management platform that underlies its Power Platform and Dynamics directly with Copilot. That capability, in testing now, would give users a more streamlined way to query data stored in their ERP and CRM systems from inside Copilot.

Rethinking the ‘headless’ approach. With Microsoft looking to make the Super App its new front-end user experience, what happens to Office? Its competitors like Salesforce and SAP are moving toward the idea of a “headless” approach, meaning customers would access the backend CRM or Commerce data via agents, rather than traditional desktop apps.

Lamanna said he’s not a fan of the “headless” term, as it implies “it’s dumb.” He also said you can’t simply connect an AI model to a programming interface built 10 years ago without working through how to optimize for cost, performance, and retrieval.

He said the Microsoft IQ suite of intelligence layers is the key here. Work IQ analyzes emails, chats, meetings and usage patterns and preferences so Copilot and agents can make context-aware suggestions. Fabric IQ is a similar layer for Microsoft’s data platform.

Work IQ is becoming like the headless version of Microsoft 365, Lamanna said. That means users can get to their email, docs, and files without having to use applications like SharePoint or Outlook in between. Work IQ becomes a kind of in-the-background version of Microsoft 365, and the Super App automatically invokes whichever IQ/service/backend is needed.

“Copilot can navigate to these IQs as needed. For email, go to Work IQ. Info inside Dynamics 365, go to the MCP servers that it publishes. Data from Salesforce or ServiceNow, we have connectors. But you stay in the Super App,” Lamanna explained.

If Microsoft is no longer the Windows company or the Office company, what is it going to be when it grows up?

“We want to be the Copilot company,” said Lamanna without hesitation. “Copilot with the Super App is the front door to basically everything, from Dynamics, to GitHub, to Exchange, to SharePoint, to OneDrive, to other services I don’t even remember.”

Alongside that, Microsoft will continue to be an infrastructure company, he added, focusing on tokens, compute and storage.

“Those are probably the two most interesting businesses in technology for the next 10 years.”

This week on the GeekWire podcast: Microsoft and Amazon both reported quarterly numbers, and both stocks rose on cloud results that beat expectations. Is all that AI spending paying off? And in related news, Microsoft sees a rare annual headcount decline, hitting product R&D hardest. 

Plus: Satya Nadella builds a Power BI dashboard out of an analyst’s research report, and touts it on the earnings call to make a bigger point. Jeff Bezos names Amazon’s chips business as the long-awaited fourth pillar. And AI House managing director Jacob Colker delivers a much-needed pep talk for Seattle tech, calling on the region to recognize and build on its strengths. 

Related stories and links

Microsoft and Amazon earnings

• Microsoft Azure tops $100B in annual revenue as record AI spending cuts into cash flow
• AWS is ‘booming,’ but Amazon’s free cash flow turns negative on record AI spending
• Microsoft R&D jobs drop for second straight year as total headcount falls for first time in a decade
• Which Microsoft businesses are growing and shrinking, according to obscure table in regulatory filing

Amazon’s fourth pillar

• Jeff Bezos says this business is becoming Amazon’s next ‘pillar’

A rallying cry for Seattle tech

• Watch: A venture capitalist’s passionate speech, a rallying cry, really, about Seattle
• Seattle’s AI2 Incubator rebrands as AI House, and adds key investor as managing director
• ‘I’m tired of that narrative’: Seattle VC pushes back on tech exodus talk

The Washington tech ecosystem

• New map traces Washington state’s tech ‘universe’ to a few key hubs, and shows what’s at risk
• After hiring AWS exec and raising $107M seed round, Virginia startup plants flag in Seattle area
• GeekWire’s Seattle engineering centers list

Subscribe to GeekWire in Apple Podcasts, Spotify, or wherever you listen.

The first thing I do when Microsoft’s 10-K or 10-Q comes out is hit Ctrl-F and go waaaay down to the section called “Revenue, classified by significant product and service offerings.” It’s on Page 85 of the 10-K that came out Wednesday with its quarterly and annual results.

From my perspective, this gives the clearest view of what’s actually happening in Microsoft’s business. It groups things into categories and product names that match a real-world understanding of the company, as opposed to the mumbo jumbo you have to decode otherwise.

Microsoft reports its results in three broad segments: Productivity and Business Processes, Intelligent Cloud, More Personal Computing. Businesses like Azure, Xbox, Windows and LinkedIn all basically disappear inside them, until you dig into the filing.

Overall, for the fiscal year ended June 30, Microsoft’s revenue increased 18%, or $50.1 billion, to $331.8 billion. Here is what the 10-K table shows about the real drivers of the business.

Two business lines are driving nearly all of Microsoft’s growth.

Of the $50.1 billion in revenue that Microsoft added for the fiscal year, $31 billion came from Server products and cloud services, accounting for 62% of the company’s growth.

This category includes Azure, along with SQL Server, Windows Server, Visual Studio, GitHub and Nuance. Microsoft doesn’t detail Azure revenue in its financial statements, but CEO Satya Nadella said on the earnings call that Azure passed $100 billion in annual revenue for the first time this year.

At total revenue of $129.4 billion, this is by far Microsoft’s biggest business, accounting for nearly 40% of its annual revenue.

The second biggest growth came from Microsoft 365 Commercial, which added $14.2 billion in revenue, up 16% to $102 billion. Microsoft 365 Commercial covers the business subscriptions: Office, Teams, SharePoint, Exchange, security and compliance, and Microsoft 365 Copilot.

Taken together these two business lines produced 90% of Microsoft’s growth for the year.

They’re also where the company is monetizing AI most successfully: Azure, AI infrastructure and GitHub Copilot in server and cloud; and Microsoft 365 Copilot in Microsoft 365 Commercial.

Two of Microsoft’s longtime businesses got smaller.

• Windows and Devices revenue fell $230 million, to $17.1 billion. Once the biggest growth engine for the company as a whole, the PC operating system business has been flat for the past four years, using the categories as Microsoft now defines them.
• Xbox revenue fell $1.7 billion, to $21.8 billion. That’s the first annual decline since Microsoft completed its $69 billion Activision Blizzard acquisition. It comes as Microsoft overhauls the business, cuts jobs and takes a write-down on unspecified Xbox assets.

Other notes and observations from the table:

• LinkedIn, at $19.8 billion, now generates more revenue than Windows and Devices. It passed Windows in fiscal 2025 and extended the lead this year, growing 11% while Windows declined.
• Microsoft 365 Consumer was the fastest-growing category after server products, up 24% to $9.2 billion.
• Search advertising grew 9% to $15.2 billion, and is closing in on Windows and Devices.
• Dynamics grew 15% to $9 billion. Enterprise and partner services, the consulting business, grew 6% to $8.3 billion.

Thoughts? Let me know on LinkedIn. Here’s our coverage of the earnings.

Microsoft has topped earnings expectations consistently in recent years, yet its stock is near a one-year low. So while it’s worth paying attention to revenue and profits when the company reports its fiscal year-end results Wednesday, there are clearly other forces at play on Wall Street.

Here are the key stats and trendlines to watch going into the earnings report for the fourth quarter of the company’s 2026 fiscal year, ended June 30.

Core numbers: Analysts expect revenue of about $87.7 billion for the quarter, up 14.7% from a year ago, and earnings of $4.24 per share, up 16%, according to Yahoo Finance. Microsoft’s own revenue guidance was $86.7 billion to $87.8 billion — meaning Wall Street is looking for a result at the very top of the company’s range.

For the full fiscal year, that works out to roughly $329 billion in revenue, up 17% from $281.7 billion in fiscal 2025.

Capital expense: This is the big one. Microsoft told investors to expect more than $40 billion in capital spending for the quarter, which would be a record — up from $31.9 billion in the March quarter and $37.5 billion in the one before that. About two-thirds goes to GPUs and other short-lived hardware.

For the calendar year, the company expects to spend roughly $190 billion. Chief Financial Officer Amy Hood said about $25 billion of that total is the result of higher component prices.

One big question this week will be the company’s guidance for capex going forward. Because this is the fiscal year-end, Wednesday brings the company’s first capital spending guidance for fiscal 2027, which began July 1.

Capex concerns: Google parent Alphabet last week foreshadowed what may happen to Microsoft. It reported revenue up 24% and cloud revenue up 82%, then raised its own capital spending forecast to as much as $205 billion — well above the roughly $188 billion analysts expected. The stock fell 7% the next day and Alphabet fell below its prior $4 trillion market valuation.

Big picture, investors seem to have decided the capital spending is getting ahead of the payoff. Data centers and chips cost money now, while the AI revenue meant to justify them arrives over years — if it ever reaches the scale these companies are promising.

Moody’s Ratings raised its own red flags about this last week, saying the six largest cloud and AI platforms will spend about $785 billion this year and close to $1 trillion in 2027. Demand is real and accelerating, the ratings agency said, but “the ultimate return on investment is unclear.”

Cloud margins: This is where the capital spending starts to become evident in the company’s core quarterly results. Microsoft Cloud gross margin — the share of cloud revenue left after the cost of delivering the service — has slipped from 72% three years ago to 66% last quarter.

For the quarter it reports Wednesday, Microsoft told investors to expect about 64%. On the prior earnings call, Hood attributed the decline to AI infrastructure costs and growing use of GitHub Copilot, partly offset by efficiency gains in Azure.

Microsoft doesn’t absorb the cost of a data center all at once. It spreads the expense across the years the equipment is expected to last. That cost shows up here, in the expense of running the cloud — making this one of the first places where the capital spending hits earnings.

Microsoft Azure: On its prior conference call, Microsoft said it expected the Azure cloud business to grow 39% to 40% in constant currency in Q4, a slight acceleration from the 39% posted in Q3. Analysts expect roughly the same, with some outliers such as BNP Paribas looking for 41%.

But the published expectations aren’t the real bar. In January, Azure grew 38% — ahead of Microsoft’s guidance — and the stock fell 10%, because Wall Street had privately been expecting 39.4%.

Azure’s growth rate also reflects a choice as much as it does demand. Microsoft has been routing scarce computing capacity to its own products first — Copilot, GitHub Copilot, internal research — and selling what remains to Azure customers. Hood has said the growth rate would have been higher had that capacity gone to customers instead. Demand continues to outrun supply, and the company expects to stay “constrained at least through 2026.”

Business Insider reported Sunday that the shortage of supply has pushed Microsoft to shop for additional computing capacity outside its own data centers, evaluating capacity from Amazon and Google, and that Amazon stepped in following a series of GitHub outages.

Copilot and AI revenue: Microsoft said in April that its AI business had reached a $37 billion annual revenue run rate, up 123% from a year earlier. It was the first update to that number since January 2025, when the company put it at $13 billion. Whether Microsoft discloses it a third time Wednesday is a signal in itself.

Microsoft 365 Copilot passed 20 million paid seats last quarter, up from 15 million in January. That’s about 4.4% of the 450 million commercial seats across Microsoft 365 — the gap that has drawn skepticism from investors all year. Microsoft said it expects the number of new paid seats to grow again this quarter.

Meanwhile, the company is launching new initiatives to drive adoption of AI among its customers. Earlier this month it launched the Microsoft Frontier Company, a $2.5 billion effort to put 6,000 engineers inside customer organizations to help them deploy AI.

Wednesday is also the first report since Microsoft changed how it charges for GitHub Copilot. As of June 1, customers pay based on usage rather than a flat fee per user.

The OpenAI backlog: Microsoft’s remaining performance obligations — RPO, a measure of contracts customers have signed but the company has not yet fulfilled — reached $627 billion last quarter, up 99% from a year earlier. About a quarter of that is expected to become revenue in the next 12 months. It’s the strongest evidence that there’s real demand supporting the AI buildout.

But the RPO is also highly concentrated. In January, when it stood at $625 billion, 45% was tied to OpenAI — roughly $281 billion committed by a single customer that is still losing money. Take OpenAI out of last quarter’s figure and the growth drops from 99% to 26%.

Then in April, Microsoft and OpenAI revamped their partnership, and OpenAI ended its exclusive commitment to run on Azure.

Reliability: On July 23, a bug in Microsoft’s automated network maintenance tooling cut a West US Azure data center off from the company’s global network, knocking out Teams, SharePoint, OneDrive and Copilot Chat for about five hours. Microsoft has published a preliminary post-incident report, and a final one is due within two weeks.

The outage falls in the quarter that began July 1, so it won’t appear in Wednesday’s numbers. But it comes as Microsoft is asking businesses to hand AI agents real control of their operations.

Retirement charge: Wednesday’s results will include about $900 million in one-time costs from Microsoft’s voluntary retirement program, the first in the company’s 51-year history. Hood said roughly $350 million falls in the cost of revenue and $550 million in operating expenses.

About 8,750 U.S. employees were eligible — 7% of Microsoft’s U.S. workforce — and about 30% accepted, Chief People Officer Amy Coleman confirmed in an interview with GeekWire, in line with what the company expected. Those departures reduced the size of the 4,800-job cut Microsoft announced July 6, which happened after this quarter ended.

Even with the retirement costs, Microsoft told investors it expects operating margins for the full fiscal year to be about a point higher than last year. Hood also said on last quarter’s call that headcount declined year over year and will keep declining in fiscal 2027.

Windows: Microsoft expects Windows OEM revenue — what PC makers pay to put Windows on their machines — to decline close to 20% this quarter.

A few factors are driving this:

• Last year’s wave of PC upgrades, when support for Windows 10 ended, makes for a tough comparison.
• PC makers stocked up on parts and machines ahead of rising memory prices and are now working through them.
• The PC market itself is slower, because memory prices have made computers more expensive.

The memory shortage is hitting Microsoft a few different ways. In addition to adding about $25 billion to the company’s capital spending this calendar year, as noted above, it lowers what Microsoft earns from Windows. Also, in late June, Microsoft raised Xbox console prices by $100 to $150, saying storage and memory costs had risen more than 2.5 times.

This week: Facebook parent Meta reports the same afternoon as Microsoft, with Apple and Amazon on Thursday and Alphabet already out. Check back Wednesday afternoon for coverage.