Microsoft Shifts AI Pricing Model to 'Per Seat Plus Consumption' as Copilot Usage Rises
During its fourth-quarter earnings call, Microsoft announced a shift in its artificial intelligence business model from per-seat pricing to a combination of per seat and consumption-based billing. CEO Satya Nadella emphasized that this evolution is expanding the company's total addressable market (TAM) while delivering greater value to customers by aligning revenue with actual AI usage. Microsoft has already implemented usage-based billing for Microsoft 365 Copilot, which thousands of users are now actively using and paying for. GitHub Copilot also reported meaningful revenue from its new consumption model. The company is integrating more AI experiences into enterprise workflows, positioning Copilot as a central part of its strategy with features like Chat, CoWork, Autopilot, and Code converging in what Nadella described as Microsoft's 'flagship super app.' The shift reflects growing demand for AI tools that are embedded in daily operations. Despite this progress, Microsoft continues to invest heavily in expanding its AI infrastructure due to high customer demand outpacing current computing capacity.
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Topics: AI Copilot Microsoft usage-based pricing