Amid a flurry of hype, Microsoft reorganizes entire dev team around AI

Shift ensures the majority of Microsoft's developer resources will focus on AI.

Microsoft CEO Satya Nadella has announced a dramatic restructuring of the company's engineering organization, which is pivoting the company's focus to developing the tools that will underpin agentic AI.

Dubbed "CoreAI - Platform and Tools," the new division rolls the existing AI platform team and the previous developer division (responsible for everything from .NET to Visual Studio) along with some other teams into one big group.

As for what this group will be doing specifically, it's basically everything that's mission-critical to Microsoft in 2025, as Nadella tells it:

This new division will bring together Dev Div, AI Platform, and some key teams from the Office of the CTO (AI Supercomputer, AI Agentic Runtimes, and Engineering Thrive), with the mission to build the end-to-end Copilot & AI stack for both our first-party and third-party customers to build and run AI apps and agents. This group will also build out GitHub Copilot, thus having a tight feedback loop between the leading AI-first product and the AI platform to motivate the stack and its roadmap.

To accomplish all that, "Jay Parikh will lead this group as EVP." Parikh was hired by Microsoft in October; he previously worked as the VP and global head of engineering at Meta.

The fact that the blog post doesn't say anything about .NET or Visual Studio, instead emphasizing GitHub Copilot and anything and everything related to agentic AI, says a lot about how Nadella sees Microsoft's future priorities.

So-called AI agents are applications that are given specified boundaries (action spaces) and a large memory capacity to independently do subsets of the kinds of work that human office workers do today. Some company leaders and AI commentators believe these agents will outright replace jobs, while others are more conservative, suggesting they'll simply be powerful tools to streamline the jobs people already have.

Nadella doesn't sound particularly conservative on this front, though. His blog post opens with this extraordinarily lofty series of statements:

As we begin the new year, it’s clear that we’re entering the next innings of this AI platform shift. 2025 will be about model-forward applications that reshape all application categories. More so than any previous platform shift, every layer of the application stack will be impacted. It’s akin to GUI, internet servers, and cloud-native databases all being introduced into the app stack simultaneously. Thirty years of change is being compressed into three years!

Those are some big promises and expectations. If we take his words at face value, it appears he expects agentic AI to be at the heart of a global transformation and considers it Microsoft's core objective over the next three years to be making sure its software and services are the ones that underpin that.

Agentic AI is imagined as the next big turning point for the tech industry, and for the world of work in general. It's seen as a step forward from general purpose LLM chatbots like ChatGPT—which aren't really specialized in anything and require informed users to work to get the most out of them—and limited-scope, feature-specific applications of deep learning, like Apple has introduced in its platforms and software.

Most observers believe some kind of widespread application of agentic AI is likely, but Nadella's grandiose vision of completely transforming software development, and by extension the entire industry, with this reorganization suggests he's one of the most bullish voices on agentic AI, to say the least.

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