Microsoft Copilot Backlash, The AI Bet That Is Starting to Crack

Microsoft’s Copilot was meant to be the breakthrough enterprise AI product, but customer backlash is telling a different story.

In early December 2025, reports suggested Microsoft quietly lowered internal growth expectations for some AI products as customers pushed back on “agentic AI” add-ons. Copilot has become the lightning rod, with many users comparing it to Clippy because it can feel like extra clutter, prompts, and rework.

So why the backlash, if AI is truly transformative?

In this video, I break down three core reasons:
1. Copilot can slow people down: even good outputs still require heavy editing and checking.
2. Trust and security fears are rising, especially with system-level AI features like Windows Recall.
3. Enterprise data is messy, poorly governed, and inconsistent, which drives hallucinations when AI tries to “fill the gaps” with confident guesses.

The bigger point is uncomfortable: hallucinations are not a simple bug you can patch out. They are a natural outcome of how language models work, which is why scaling alone will not make them disappear. The path to trustworthy enterprise AI is grounding, verification, and provenance, not blind faith in bigger models.

If enterprises cannot prove ROI, the infrastructure build-out starts to look risky. That’s where corrections begin: slower capex, compressed valuations, and consolidation.