Has Microsoft Lost Its Mojo (Again)?

This week, Satya Nadella kicked off Microsoft’s annual Build developer’s conference with typical boasts about new products and a sunny view of AI. The focus of his speech was how Microsoft was going gaga for agentic AI. But there was a cloud over the gathering at San Francisco’s Fort Mason, and I’m not talking about Azure. While the valuations and share prices of its competitors have soared, Microsoft’s stock has been down this year. Its workplace AI products, which like just about everything at Microsoft these days are called Copilot, have had disappointing uptake. And while the company was an early leader in coding tools, Anthropic has grabbed the lead with its groundbreaking agentic approach to coding. Microsoft responded by ending its Claude Code licenses to force its developers to use Copilot. Meanwhile, GitHub, the invaluable code repository and Microsoft subsidiary, has had unprecedented downtimes that have led longtime fans to complain and even defect. One Reddit post said it outright: “Has GitHub become a dumpster fire?” For Microsoft, losing the hearts and minds of the coding community would amount to a catastrophe. Remember former CEO Steve Ballmer’s famous summary of what kept the company ahead? Developers! Developers! Developers! Scott Hanselman is a Microsoft VP who is on the GitHub technical staff. He has spent countless hours talking to developers, training engineers, and evangelizing GitHub and AI. He’s also smack in the middle of Microsoft’s belated effort to seize the agentic moment. Late last year, he was considering leaving the company after 18 years to teach high school science. But in November, he became supercharged by the agentic coding revolution kicked off by Claude Code and OpenClaw. He helped bring the latter, which is open-source, into Microsoft. At the Build conference, he was part of Nadella’s keynote, demonstrating how the company’s “copilots” could automate tasks for coders, workers, and anyone else. Hanselman seemed the perfect spokesperson to explain what’s happening at Microsoft. After busting out the gate three years ago as a leader in the generative AI era, has Microsoft lost its mojo? (This interview has been edited for clarity and concision.) STEVEN LEVY: GitHub users have been complaining lately about frequent downtimes. Some have left. What’s going on there? SCOTT HANSELMAN: You remember when social media got flooded by bots, or 20 years ago when email got flooded by spam? The incoming traffic to GitHub and the usage of GitHub is as many bots as people. GitHub, I think, is doing a great job of scaling to meet that need, but the bots are very, very fast. I think this is just a hiccup moment. How are you convincing developers that this is just a hiccup and not a sign of complacency? It’s easy to say it’s down at this moment, but people forget that it’s up 99 percent of the time. It’s just under tremendous pressure from the bots. Microsoft’s biggest announcement at Build was about agents and its OpenClaw adoption, through a product called Scout. You helped make that happen and even brought OpenClaw founder Peter Steinberger into the process. It's just one of those things that happens when open-source people talk. Last year, OpenClaw started everything. I made a little Windows app, Satya thought it was exciting, and I started talking to folks. Microsoft had been thinking about agents on Windows for a very long time, and I just thought, “This is a great opportunity for us, why not go for it?”