Microsoft's AI chatbot 'Copilot' is facing growing user dissatisfaction due to confusing branding and interoperability issues, and the percentage of users who support it is declining.
Microsoft offers its own chatbot, Copilot, but as it works more closely with OpenAI, it's finding it harder to compete with OpenAI's ChatGPT, the Wall Street Journal reports.
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Microsoft's stock price fell following the release of its second-quarter financial results for fiscal year 2026 at the end of January. Despite strong operating profits, the company's stock price fell due to slowing revenue from cloud services and other sources, contrary to investor expectations.
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The Wall Street Journal also reported that 'the company's AI business relies on OpenAI and Copilot's unproven effectiveness was also a cause for concern,' and cited several data points to Copilot's sluggish growth.
According to a survey of more than 150,000 people in the United States conducted by market research firm Recon Analytics, the percentage of paying subscribers who said they use Copilot as their first choice for AI fell from 18.8% to 11.5% between July 2025 and late January 2026. Meanwhile, the percentage of paying subscribers who chose Google's Gemini as their first choice rose from 12.8% to 15.7%.
Respondents who switched from Copilot to other services cited 'better quality' as a reason, while others cited poor user experience and strict usage restrictions. According to the company's data, people who have equal access to Copilot, ChatGPT, and Gemini subscriptions chose ChatGPT and Gemini at higher rates than Copilot.
According to a Citigroup survey, some companies are only using about 10% of their Copilot subscription quota, and Citigroup pointed out that 'disorganization' is a problem.
Current and former Microsoft employees who worked on AI products say confusing brand positioning and interoperability issues are frustrating users. Microsoft research has found that some users are frustrated by Copilot suddenly appearing everywhere, from documents to browsers, and by Copilot's inconsistent behavior across different product lines.
Meanwhile, rival Anthropic's AI product, Claude Cowork, has been praised for its ability to work within and across 365 applications in ways that Copilot users have struggled to do. The release of Claude Cowork was one of the factors that caused Microsoft shares to fall that day.
However, according to Jared Spataro, Microsoft's chief marketing officer for AI, 'Copilot's daily active user base has grown 10-fold year-over-year, outpacing the growth rate of other 365 enterprise products,' meaning the pace of growth itself is unprecedented.
Though Microsoft is lagging behind in the chatbot race, it has made hundreds of billions of yen from the demand for AI-driven cloud computing. Analysts say the company's software is used by hundreds of millions of enterprise users, giving it an easy opportunity to promote new AI products. This puts it in a strong position to easily close the gap.
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