Microsoft faces down sueball, capacity problems in series of challenges

Microsoft is facing AI-related issues on multiple fronts. Disgruntled investors have flung a sueball at the company over its Copilot claims, while it is reportedly turning to other cloud vendors to help with AI-induced scalability issues at its coding collaboration tentacle, GitHub.

The sueball is a class action, filed by the City of St. Clair Shores Police and Fire Retirement System in the Seattle US District Court, that alleges that Microsoft bosses (including its CEO, Satya Nadella) made "materially false and/or misleading" statements about adoption of the company's Copilot technology.

On the contrary, according to the complaint, "Microsoft’s flagship proprietary AI model ranked well below competitors on a number of benchmark tests," and "Microsoft had failed to convert a significant percentage of its commercial Microsoft 365 users to paid Copilot subscriptions and the Company's Copilot offerings had lost market share to rival products, a trend that was increasing."

Some organizations are gung-ho for Copilot these days – NHS England, for example, announced plans last week to roll the technology out to more than half a million staff. However the class action alleges Microsoft's SEC filings did not clearly explain problems "regarding the development and customer adoption of Copilot products and Microsoft's proprietary AI models."

On January 28, Microsoft announced results for its fiscal second quarter, which included a slowdown in Azure growth and an admission that paid Microsoft 365 seats had reached only 15 million out of 450 million Microsoft 365 users.

The company's shares subsequently declined by more than $48 per share, around ten percent of their value at the time, according to the complaint.

“We are aware of the complaint and believe the claims are without merit. Microsoft stands by the integrity of its public statements and will vigorously defend itself in court," a Microsoft spokesperson told The Register.

Git thee to AWS?

Microsoft's AI headaches are not limited to the sueball, which the company reportedly claims "is without merit." Its source-shack tentacle, GitHub, is also reportedly facing the possibility of being forced to leap into bed with a rival to address ongoing reliability and scalability woes.

Microsoft acquired GitHub in 2018, but the source site has sometimes struggled with availability amid a surge in AI-assisted workflows. The site has attempted to shift workloads to Azure, but has, for many users, remained unreliable. Azure has, infamously, had its own capacity problems recently. 

According to reports, the source shack will be propped up with additional resources from AWS, although it is not clear whether this is a temporary measure to address immediate problems or something more permanent. After all, given the choice, few IT managers would entrust all their workloads to a single vendor, and a multicloud approach is sensible.

The Register asked GitHub if the reports were correct, but the site has yet to respond.

It is, however, a little embarrassing when your owner operates its own cloud service. ®