Microsoft announced a comprehensive restructuring of its AI operations on Tuesday. AI CEO Mustafa Suleyman will now solely concentrate on developing frontier models, and the company will unite its commercial and consumer Copilot teams under a single leader. The actions coincide with the company’s preparations for widespread pricing increases for its Microsoft 365 suite, which will begin in July and are primarily justified by AI capabilities.
Under New Leadership, A Unified Copilot
Former Snap executive Jacob Andreou, who joined Microsoft last year as corporate vice president of Product and Growth, will take over as executive vice president of Copilot. He will be in charge of the AI assistant’s consumer and enterprise versions and will answer directly to CEO Satya Nadella. The goal of the consolidation is to improve the user experience across the company’s different Copilot products, according to some workers.In an internal memo seen by The Wall Street Journal and posted on Microsoft’s blog, Nadella said, “This is how we move from a collection of great products to a truly integrated system, one that is simpler and more powerful for customers.”
Together with Andreou, Ryan Roslansky, Perry Clarke, and Charles Lamanna will oversee the Copilot platform and Microsoft 365 apps. In the meantime, Suleyman will leave Copilot’s daily operations to focus on the company’s “superintelligence mission,” a five-year endeavor to develop cutting-edge AI models and lessen Microsoft’s dependency on OpenAI.
The reorganization comes after Rajesh Jha, a longstanding executive vice president of Experiences and Devices who managed Office, Windows, and Microsoft 365 for over 35 years at the firm, announced his retirement. On July 1, Jha will move into an advisory position.
Cost Increases For Microsoft 365
Separately, starting on July 1, 2026, Microsoft plans to increase the cost of all of its commercial Microsoft 365 and Office 365 subscriptions. Depending on the subscription tier, the price hikes will range from about 5% to 33%. Frontline worker tier F1 will increase from $2.25 to $3 per month, while Microsoft 365 Business Basic will increase from $6 to $7 per user. The business credited the increases to improved security tools and device management capabilities, as well as the incorporation of Copilot Chat features into Word, Excel, PowerPoint, Outlook, and OneNote. In addition to the higher basic subscriptions, a full Microsoft 365 Copilot license will still cost $30 per user each month.
The More Comprehensive AI Bet
The conflict at the core of Microsoft’s AI strategy is reflected in the two actions: organizational consolidation and increased pricing. In an effort to prove that the investment warrants premium price, the corporation is investing substantially in integrating generative AI throughout its product lineup. “Four connected pillars: Copilot experience, Copilot platform, Microsoft 365 apps, and AI models” comprised the new organization, according to Nadella’s memo. How well the idea works may depend on whether consumers see integrated AI features as an unwanted cost hike or as added value.