Seattle is looking to celebrate and accelerate its leadership in artificial intelligence at the very moment the first wave of the AI economy is crashing down on the region’s tech workforce.

That contrast was hard to miss Monday evening at the opening reception for Seattle AI Week 2025 at Pier 70. On stage, panels offered a healthy dose of optimism about building the AI future. In the crowd, buzz about Amazon’s impending layoffs brought the reality of the moment back to earth.

A region that rose with Microsoft and then Amazon is now dealing with the consequences of Big Tech’s AI-era restructuring. Companies that hired by the thousands are now thinning their ranks in the name of efficiency and focus — a dose of corporate realism for the local tech economy.

The double-edged nature of this shift is not lost on Washington Gov. Bob Ferguson.

“AI, and the future of AI, and what that means for our state and the world — each day I do this job, the more that moves up in my mind in terms of the challenges and the opportunities we have,” Ferguson told the AI Week crowd. He touted Washington’s concentration of AI jobs, saying his goal is to maximize the benefits of AI while minimizing its downsides.

Seattle AI Week, led by the Washington Technology Industry Association, was started last year after a Forbes list of the nation’s top 50 AI startups included none from Seattle, said the WTIA’s Nick Ellingson, opening this year’s event. That didn’t seem right. Was it a messaging problem?

“A bunch of us got together and said, let’s talk about all the cool things happening around AI in Seattle, and let’s expand the tent beyond just tech things that are happening,” Ellingson explained.

So maybe that’s the best measuring stick: how many startups will this latest shakeout spark, and how can the Seattle region’s startup and tech leaders make it happen? Can the region become less dependent on the whims of the Microsoft and Amazon C-suites in the process? 

“Washington has so much opportunity. It’s one of the few capitals of AI in the world,” said WTIA’s Arry Yu in her opening remarks. “People talk about China, people talk about Silicon Valley — there are a few contenders, but really, it’s here in Seattle. … The future is built on data, on powerful technology, but also on community. That’s what makes this place different.”

And yet, “AI is a sleepy scene in Seattle, where people work at their companies, but there’s very little activity and cross-pollinating outside of this,” said Nathan Lambert, senior research scientist with the Allen Institute for AI, during the opening panel discussion.

No, we don’t want to become San Francisco or Silicon Valley, Lambert added. But that doesn’t mean the region can’t cherry-pick some of the ingredients that put Bay Area tech on top.

Whether laid-off tech workers will start their own companies is a common question after layoffs like this. In the Seattle region at least, that outcome has been more fantasy than reality. 

This is where AI could change things, if not with the fabled one-person unicorn then with a bigger wave of new companies born of this employment downturn. Who knows, maybe one will even land on that elusive Forbes AI 50 list. (Hey, a region can dream!)

But as the new AI reality unfolds in the regional workforce, maybe the best question to ask is whether Seattle’s next big thing can come from its own backyard again.

Microsoft and OpenAI announced the long-awaited details of their new partnership agreement Tuesday morning — with concessions on both sides that keep the companies aligned but not in lockstep as they move into their next phases of AI development.

Under the arrangement, Microsoft gets a 27% equity stake in OpenAI’s new for-profit entity, the OpenAI Group PBC (Public Benefit Corporation), a stake valued at approximately $135 billion. That’s a decrease from 32.5% equity but not a bad return on an investment of $13.8 billion.

At the same time, OpenAI has contracted to purchase an incremental $250 billion in Microsoft Azure cloud services. However, in a significant concession in return for that certainty, Microsoft will no longer have a “right of first refusal” on new OpenAI cloud workloads.

Microsoft, meanwhile, will retain its intellectual property rights to OpenAI models and products through 2032, an extension of the timeframe that existed previously. 

A key provision of the new agreement centers on Artificial General Intelligence (AGI), with any declaration of AGI by OpenAI now subject to verification by an independent expert panel. This was a sticking point in the earlier partnership agreement, with an ambiguous definition of AI potentially triggering new provisions of the prior arrangement. 

Microsoft and OpenAI had previously announced a tentative agreement without providing details. More aspects of the deal are disclosed in a joint blog post from the companies.

Shares of Microsoft are up 2% in early trading after the announcement. The company reports earnings Wednesday afternoon, and some analysts have said the uncertainty over the OpenAI arrangement has been impacting Microsoft’s stock. 

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The current generation of Xbox and PlayStation consoles is now more than five years old, making it well past the time we would start hearing about what the next generation of consoles will look like. We've seen several rumours on what the next-generation Xbox hardware will include, and on top of comments from Xbox president Sarah Bond, a picture of Xbox's next console is starting to form. Now, a new report from Windows Central seems to piece it together a bit more clearly, framing the next Microsoft console as a best of both worlds between the PC and console experience. […]

Read full article at https://wccftech.com/next-gen-xbox-will-reportedly-be-best-of-both-worlds-between-pc-and-console/

Last week, a ResetEra user discovered that the new Gaming Copilot AI installed by Microsoft on all Windows 11 PCs (integrated directly into the Game Bar) was training itself by screenshotting every game played by the user and then sending everything back to Microsoft. Gaming Copilot is also enabled by default, so if you want to turn it off, you need to go to the Game Bar, and then to Settings and Privacy Settings, where you will find the option for Gaming Copilot to pull "Model training on text" or not. Needless to say, this discovery sparked a big controversy […]

Read full article at https://wccftech.com/microsoft-comments-gaming-copilot-ai-controversy/

Microsoft is officially ending support for Office Online Server on December 31, 2026, marking the end of its self-hosted Office apps. The move pushes enterprises toward Microsoft 365, where the company is focusing on cloud-first services, tighter integration, and AI features like Copilot.

From empty offices in 2020 to AI colleagues in 2025, the way we work has been completely rewired over the past five years. Our guest on this week’s GeekWire Podcast studies these changes closely along with her colleagues at Microsoft.

Colette Stallbaumer is the co-founder of Microsoft WorkLab, general manager of Microsoft 365 Copilot, and the author of the new book, WorkLab: Five years that shook the business world and sparked an AI-first future, from Microsoft’s 8080 Books.

As Stallbaumer explains in the book, the five-year period starting with the pandemic and continuing to the current era of AI represents one continuous transformation in the way we work, and it’s not over yet.

“Change is the only constant—shifting norms that once took decades to unfold now materialize in months or weeks,” she writes. “As we look to the next five years, it’s nearly impossible to imagine how much more work will change.”

Listen below for our conversation, recorded on Microsoft’s Redmond campus. Subscribe on Apple or Spotify, and continue reading for key insights from the conversation.

The ‘Hollywood model’ of teams: “What we’re seeing is this movement in teams, where we’ll stand up a small squad of people who bring their own domain expertise, but also have AI added into the mix. They come together just like you would to produce a film. A group of people comes together to produce a blockbuster, and then you disperse and go back to your day job.”

The concept of the ‘frontier firm’: “They’re not adding AI as an ingredient. AI is the business model. It’s the core. And these frontier firms can have a small number of people using AI in this way, generating a pretty high run rate. So it’s a whole new way to think about shipping, creating, and innovating.”

The fallacy of ‘AI strategy’: “The idea that you just need to have an ‘AI strategy’ is a bit of a fallacy. Really, you kind of want to start with the business problem and then apply AI. … Where are you spending the most and where do you have the biggest challenges? Those are great areas to actually think about putting AI to work for you.”

Adapting to AI: “You have to build the habit and build the muscle to work in this new way and have that moment of, ‘Oh, wait, I don’t actually need to do this.’ “

The biggest risk related to AI: “The biggest risk is not AI in and of itself. It’s that people won’t evolve fast enough with AI. It’s the human risk and ability to actually start to really use these new tools and build the habit.”

Human creativity and AI: “It still takes that spark and that seed of creativity. And then when you combine it with these new tools, that’s where I have a lot of hope and optimism for what people are going to be able to do and invent in the future.”

Audio editing by Curt Milton.

Subscribe to GeekWire in Apple Podcasts, Spotify, or wherever you listen.

The Halo: Combat Evolved remake we've all been anticipating today, as part of the Halo WCC, has finally been announced. Halo: Campaign Evolved is a remake that Halo Studios and Xbox describe as "a faithful yet modernized remake of Halo: Combat Evolved’s campaign." It'll arrive on Xbox Series X/S, PC, and PlayStation 5 sometime in 2026. We've officially seen it all now, with all of Microsoft and Xbox's biggest first-party franchises making their way to PlayStation. It was the inevitable endpoint we all saw when Halo Studios (formerly 343 Studios) confirmed that it would be dropping the Slipspace Engine and […]

Read full article at https://wccftech.com/halo-remake-halo-campaign-evolved-coming-to-pc-xbox-ps5-2026/

Back in 2015, Microsoft was laying the groundwork for Cortana, gaming, and your Xbox. Here's a flashback to our original coverage.

For the last two years, Microsoft’s video game division has been working to meet financial targets that are well in excess of the typical industry standard, which has led to waves of layoffs, canceled projects, and a general perception that the company is scrambling.

These allegations come from a new report from Bloomberg journalists Jason Schreier and Dina Bass, who reported that Xbox has been told it’s expected to work toward a profit margin of 30% across the board.

As far as can be told from outside Microsoft, this is significantly above Xbox’s profit baseline. A typical quarterly report from Microsoft only discloses revenue, but as noted by TweakTown, Xbox head Phil Spencer testified in court in 2022 that “the Xbox business today runs at a single-digit profit margin.”

It’s worth noting that even the biggest game studios usually maintain a profit margin of roughly 20% under typical circumstances. As an example, Xbox subsidiary Activision Blizzard, which runs some of the most popular games-as-a-service in the world today, “only” had a profit margin of 22-to-25% two years ago before Microsoft’s acquisition completed.

Even Sony, Microsoft’s primary competitor in the console space and the makers of the PlayStation 5, reportedly only runs at a 9.5% profit margin. Through that lens, any video game company that’s honestly eyeing a consistent 30% is living in a dream world.

The new financial target reportedly came directly from Microsoft CFO Amy Hood in the fall of 2023, which marked the start of a series of big decisions and policy reversals at Xbox.

Since then, Microsoft has drawn fire for multiple waves of layoffs; reorganized several subsidiaries such as Halo Studios; raised the base MSRP of the Xbox Series X twice so far this year; made moves to phase out physical media; officially ported many of its hit first- and third-party games to PlayStation and Switch; and canceled multiple highly-anticipated game projects such as Rare’s Everwild, a reboot of Perfect Dark, and ZeniMax’s MMO code-named Project Blackbird.

Earlier this month, Microsoft hiked the price of its Xbox Game Pass subscription service, claiming it was part of a significant “upgrade package.” Less relevantly to consumers, it has also allegedly raised the price of Xbox development kits by $500, blaming unspecified “macroeconomic” factors.

Some of that, to be fair, is due to circumstances outside Xbox’s control such as the ongoing chaos over tariffs. This year has been a rough time to be a hardware manufacturer.

Xbox is also apparently locked into at least one more console generation, according to recent interviews with Microsoft’s Sarah Bond. The phrase that keeps coming up is “very premium, very high-end curated experience.” If the recently-released Xbox Ally is any indication, the next-gen Xbox will be something more like an expensive, user-friendly Windows PC than what we’d currently recognize as a game console.

For a while now, though, Xbox has come off like its left hand doesn’t know what the right is doing, which made little sense in the wake of reports that the division was both growing and pulling in increased revenue. If it’s being forced to contend with unrealistic expectations from higher up at Microsoft, however, that would explain the overall sense of disorganization.

This is one of the most infamous types of “creative accounting” in the video game industry: issue an inflated revenue forecast, then blame developers/titles when their games fail to reach those numbers. Square Enix notoriously came under fire for this in the 2010s with releases like the 2013 reboot of Tomb Raider. It was a solid success (3.4 million copies sold), but its publisher wanted a blockbuster, so it regarded the game as a failure. History repeats.

In theory, Xbox ought to be one of the leading voices in video games as a hobby and medium right now, but it’s being forced to burn much of its time and effort in an attempt to meet a profit goal that no company on Earth could expect to reach.

If you’re inclined to believe the rumor that’s been in circulation in Seattle this year, that Microsoft’s current leadership would like to shut down Xbox entirely so it can use those resources for more AI research, this is more data for your theory.

Microsoft is announcing wider availability of Copilot Actions and Copilot Journeys in its Edge web browser, both designed to make the browser more intelligent for you.

Microsoft is rolling out a series of updates to its consumer Copilot AI assistant, including shared group chats, long-term memory, and an optional visual persona named Mico.

New capabilities include a “real talk” conversation style, a Learn Live feature that acts as a voice-enabled Socratic tutor, new connectors that link to services like Google Drive, Gmail, and Outlook, and deeper integration with Microsoft’s Edge browser.

Microsoft is competing against AI tools including Google’s Gemini, Amazon’s Alexa, Apple’s revamped Siri, OpenAI’s ChatGPT, and Anthropic’s Claude in the consumer market. 

It looks to be the single biggest Copilot update to date from the group led by Mustafa Suleyman, the Google DeepMind co-founder who joined Microsoft last year as its AI CEO. 

“This release is a milestone for what AI can deliver,” Suleyman writes in a blog post, explaining that the idea is to make Copilot a comprehensive assistant that connects users to their personal information, contacts, and tools with the goal of improving their lives.

The features are rolling out starting today in the U.S, and the company says they will be available soon in the UK, Canada, and other parts of the world. Microsoft is showing the new features in the live stream below.

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Microsoft CEO Satya Nadella’s total 2025 compensation rose nearly 22% from $79.1 million to almost $96.5 million, due mostly to the company’s booming share price boosting the value of his stock awards.

The numbers were disclosed Tuesday afternoon in the company’s annual proxy statement, along with details on Microsoft board changes, shareholder proposals raising concerns about AI risks, and a request from the board for shareholders to approve a new stock plan.

Microsoft laid off more than 15,000 employees this year — one of the most aggressive rounds of cuts in its history — citing shifting priorities and the need for efficiency amid record spending on AI infrastructure. Wall Street reacted positively to the effort to rein in operating expenses.

Much of Nadella’s total compensation — about $84.2 million — is based on the performance of the company’s stock, which has risen more than 23% in the past year, at one point pushing Microsoft’s total market value briefly past $4 trillion. 

Also announced in the proxy: Microsoft’s board nominated Walmart CFO John David Rainey as a new board member, to replace Carlos Rodriguez, current chair of the compensation committee, who is not seeking re-election.

The company’s 2025 fiscal year ended June 30. In evaluating Nadella’s performance, the board cited his work leading the expansion of the company’s AI infrastructure, Microsoft Copilot adoption and new security initiatives. 

His cash incentive bonus was $9.56 million, up from the $5.2 million paid in 2024, after he requested a reduction. The proxy statement said the increase reflected strong financial results (117% of target) and a high operational assessment (151.67% of target).

For the first time, security was used as one measuring stick for Microsoft executive compensation, part of an effort by the company to appease regulators and lawmakers after a series of high-profile breaches. In its review, the board focused on Nadella’s role in attempting to address these issues through the implementation of its Secure Future Initiative. 

In addition, Microsoft’s board is asking shareholders to approve a 2026 Stock Plan to replace the expiring 2017 plan, requesting authorization for up to 226 million new shares that it says is needed to continue granting equity awards for attracting and retaining talent.

Nadella recently appointed veteran executive Judson Althoff as CEO of Microsoft’s commercial business, a move designed to free Nadella to focus more intensely on long-term AI strategy and technology.

Microsoft’s annual meeting, held virtually, is slated for 8:30 a.m. Dec. 5.

The stakes are higher than just a lost sale. Mustafa Suleyman, the CEO of Microsoft AI, warns it can cause real world harm.