Only 3.3% of Microsoft 365 users pay for Copilot despite billion-dollar investments — while CEO Satya Nadella assures that it's "becoming a true daily habit"

Microsoft is splurging billions on AI, but the returns are almost negligible.

Microsoft CEO Satya Nadella recently indicated that Copilot's user base has grown “nearly 3x year-over-year” during an earnings call, including AI chats, the news feed, search, browsing, shopping, and “integrations into the operating system.” It's unclear how much revenue the company is actually generating from the offering.

However, a new report suggests that only 3.3% of Microsoft 365 and Office 365 users who interact with Copilot Chat actually pay for it (via The Register). In contrast, Microsoft spent a whopping $37.5 billion on its AI-themed efforts, according to the company's latest financial earnings report for FY26 Q2.

Despite investor doubt and concern, Nadella indicated Copilot is"becoming a true daily habit," further citing "record" AI momentum. Microsoft's report on Copilot adoption and growth looks good on paper; it factors in approximately 15 million paid Microsoft 365 Copilot seats, which translates to 160 percent growth year-over-year.

However, the report doesn't categorically indicate that a huge chunk of Microsoft 365 users have access to the AI-powered chatbot for free, which, as highlighted by Directions on Microsoft analyst Mary Jo Foley, could roughly translate to 450 million users.

As such, beyond the bundled Microsoft 365/Office 365 deals and discounts, Copilot's paid user base is relatively small when compared with Microsoft's broad customer base. More importantly, the software giant's splurge on AI doesn't seem to be attracting similar returns.

In 2023, Microsoft launched its 365 Copilot offering as a $30-per-user, per-month add-on, which it marketed as an AI-powered productivity tool integrated into Word, Outlook, Teams, Excel, and PowerPoint.

The tech giant is seizing this moment to set itself apart from rivals like OpenAI’s ChatGPT. It touts Copilot as an AI agent with the capability of acting on behalf of users, searching internal documents, and analyzing meetings and emails.