Greetings,

The speed of the AI race is forcing even the giants to move faster than they're comfortable with. This week, Aaron Holmes reports on how Anthropic's new "Cowork" tool—an AI agent capable of taking over a computer to handle tasks across multiple apps—has sent a jolt through Microsoft's leadership.

It's a fascinating dynamic: Satya Nadella is personally testing open-source competitors and pressuring his teams to speed up development, even as Microsoft uses Anthropic's own models to power parts of its prototypes. While Microsoft has a massive footprint with 365 Copilot, the ability of Cowork to act like a human assistant—organizing files, generating spreadsheets from images, and building presentations from scratch—has Microsoft product leaders worried they are falling behind.

Why it caught my eye:

• Internal Urgency: Satya Nadella is sounding alarms, using an internal Teams channel called "AI Accelerator" to push deputies to experiment with rival tech like Moltbot to ensure Microsoft's "apps empire" isn't eaten away by newcomers.
• The Windows Edge: While Anthropic's Cowork has made a splash, it is currently limited to the Mac. Microsoft leaders believe they have a built-in advantage to win this category by deeply integrating these "digital co-worker" features into the Windows operating system.
• Complex Partnerships: The irony of the AI era is on full display here; Microsoft is one of Anthropic's biggest customers, using their models for GitHub Copilot, even as they race to build products that would render Anthropic's standalone tools unnecessary.

This story is a perfect look at the "co-opetition" defining the industry and how the world's most valuable companies are reacting to the threat of AI agents.

Best,

Jessica Lessin
Founder & Editor-in-Chief

Microsoft Moves to Respond to New Threats From Anthropic

Anthropic's launch of Cowork, an AI-powered tool that takes over a computer to handle workplace tasks involving numerous applications, from Microsoft Office apps to Slack, has reverberated through Microsoft's ranks.

In the days following the launch this month, Microsoft product leaders told colleagues that Cowork seemed like a competitor to 365 Copilot, a suite of AI features for Microsoft's apps that aims to automate tasks such as generating documents or organizing users' files, according to someone who attended the meetings.

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