Microsoft Forms New AI Division to Accelerate Platform Shift

REDMOND, Wash. — Microsoft CEO Satya Nadella announced Monday the creation of a new engineering organization, CoreAI – Platform and Tools, to accelerate the company’s artificial intelligence (AI) initiatives. The move comes as the tech giant prepares for what Nadella describes as a transformative AI platform shift that will reshape application development and deployment.

The new division, led by Jay Parikh, former CEO of cybersecurity startup Lacework and ex-global head of engineering at Meta, will consolidate teams from Microsoft’s Developer Division, AI Platform, and the Office of the CTO. Its mission is to build an end-to-end AI stack for both Microsoft’s first-party products and third-party customers, enabling the creation and operation of AI-driven applications and agents.

“Thirty years of change is being compressed into three years,” Nadella wrote in a memo to employees. He emphasized that the AI shift will impact every layer of the application stack, likening it to the simultaneous introduction of graphical user interfaces, internet servers, and cloud-native databases.

The CoreAI group will focus on developing agentic applications with memory, entitlements, and action spaces, leveraging powerful AI models. It will also oversee GitHub Copilot, Microsoft’s AI-powered coding assistant, ensuring a tight feedback loop between product development and platform innovation.

Parikh will collaborate closely with Mustafa Suleyman, who joined Microsoft in 2023 to lead Copilot AI initiatives, and other top executives, including Scott Guthrie, head of Cloud + AI, and Kevin Scott, chief technology officer. The team aims to optimize Microsoft’s tech stack for performance and efficiency while advancing developer productivity across the company.

Microsoft’s AI strategy is deeply intertwined with its partnership with OpenAI, the creator of ChatGPT. As OpenAI’s principal investor, Microsoft relies on its large language models for internal AI applications and cloud services. However, the company is also developing competing AI tools, reflecting what Nadella has termed “cooperation tension” in its relationship with OpenAI.

Nadella stressed that organizational boundaries are secondary to customer focus and innovation. “Our success in this next phase will be determined by having the best AI platform, tools, and infrastructure,” he wrote.

The announcement underscores Microsoft’s commitment to AI as a core driver of its future growth. With AI becoming the dominant theme in tech since ChatGPT’s launch in late 2022, Microsoft is positioning itself to lead the next wave of innovation, leveraging its Azure cloud infrastructure and developer tools like GitHub and VS Code.