Microsoft is in trouble

A month ago, Microsoft felt unstoppable. The company had a bold and audacious vision of the future of Windows, and it seemed like it was actually going to pull it off.

Skip ahead to what was supposed to be the big launch day of its Copilot+ PCs, though, and that’s all changed. Instead of excitement and buzz around these Windows devices, the air is filled with caution in regard to the two primary calling cards of Copilot+: Arm and AI.

Copilot+ without AI?

Looking back now, it almost feels like concerns about security and privacy were destined to come up around Microsoft’s flagship AI feature, Recall. It’s a universal search function that has access to every app and website you’ve ever visited — all done through natural language. As neat as it sounds, there’s something inherently icky about the idea that your PC is aware of everything you’re doing on it — even with the manual controls Microsoft had in place. Even without knowing how bad the security risk was, sometimes gut reactions are right.

Things bubbled to the surface when experts in the field of security and privacy began to show how fragile Recall really was. Apparently, accessing all of the snapshots Recall takes on your PC was frighteningly simple. A week later, Microsoft was already backtracking on its position, taking Recall from on by default to opt-in. But it wasn’t enough.

On Thursday, Microsoft announced that Recall would not be available at launch on June 18. Major changes to the feature were afoot, including a “just in time” decryption for the Recall snapshots that are protected by Windows Hello, ensuring that they’re “only accessible when the user authenticates.”

We’ll have to see how long it takes for Recall to be ready for game time again as an update, but it’s hard to put the genie back in the bottle. Security concerns are already out there, and perceptions have been set. Microsoft has a lot of work to do to rebuild trust, especially when skepticism around AI privacy and security is already high. To make things worse, Apple just had its own bundle of AI announcements, which prioritized security and privacy in a way that felt bulletproof by comparison. As a tangible expression of the rivalry, the perceived success of Apple’s approach to AI resulted in a boost in stock price, putting them past Microsoft to once again be the world’s most valuable company.

But the real problem is that beyond Recall, these Copilot+ PCs don’t have a lot of other high-profile AI features. Live translation is neat, as is the Cocreator Paint feature — but these aren’t going to sell PCs. What could, however, is the performance and battery life promised by Qualcomm’s new Snapdragon X chips — if only they weren’t facing some problems of their own.

Qualcomm’s legal troubles

Microsoft has been partnered with Qualcomm for many years on its pursuit of transitioning to Arm. Qualcomm was really the only player in the game, which likely made the reported exclusivity deal feel safe for Microsoft. But a recent Qualcomm legal concern is causing some potential worry that could throw a massive wrench into Microsoft’s plans. Arm has filed a lawsuit against Qualcomm in 2022, and the two have been unable to resolve it ever since. It started with a company called Nuvia, which had licenses working with Arm and was since acquired by Qualcomm. Nuvia continued working on the chip design under Qualcomm, which would eventually be used for the company’s new Snapdragon X chips.

However, Arm claims that Nuvia’s license had been canceled when the company got acquired. Given the amount of PCs Microsoft hopes to sell with these new chips, you can see why Arm might be interested in collecting on that license.

I’m no lawyer, so I won’t pretend to know how legitimate Arm’s argument is. All I know is the dispute has been brewing for a year and a half with no resolution, and with the upcoming launch of Copilot+ PCs, the litigation between the two companies sounds like it’s coming to a head. According to a recent Reuters report, it was a big topic of conversation at Computex 2024, despite never being talked about publicly by the companies involved. If this goes the wrong way for Qualcomm, it could hold up the entire launch of Microsoft’s Copilot+ PCs.

I’m assuming that the powers that be will find a way to work things out, especially with Microsoft involved, but it’s yet another potential hangup for the rollout of Microsoft’s new fleet of laptops.

An uncertain future

Sitting in the initial briefings for Copilot+, I remember feeling rather impressed by the achievement. The amount of things that had to go right for Microsoft to successfully land this plane felt insurmountable. A transition to Arm while also going all-in on AI felt like asking for trouble. But in the moment, it really felt like Microsoft had pulled it off.

Something was bound to happen, especially with a feature as dubious as Recall on the table.

For what it’s worth, I’m still rooting for Microsoft and Qualcomm to get these two issues figured out. The result will be better laptops, and in the end, that’s what I care about.