Microsoft's AI mojo wanes as GitHub stumbles and Claude Code leads

Microsoft's annual Build conference showcased agentic AI enthusiasm, but a cloud of challenges hung over the event. The company's stock has declined this year, Copilot adoption has been slow, and GitHub—the critical developer platform—has faced unprecedented downtimes, prompting some developers to defect. Meanwhile, Anthropic's Claude Code has seized the lead in agentic coding tools, once a Microsoft stronghold. In response, Microsoft is pushing its new Scout agent platform, built on the open-source OpenClaw framework, which VP Scott Hanselman helped bring into the company. Hanselman acknowledges GitHub's bot traffic issues but insists uptime remains at 99%, calling the outages hiccups.

The bigger question: has Microsoft lost its edge with developers? Hanselman disputes that Copilot is behind, citing Windows' open platform and the opportunity for Scout to serve productivity workers. But the competitive landscape has shifted: Claude Code's groundbreaking autonomous coding approach has captured mindshare, and Microsoft had to end Claude Code licenses to enforce Copilot use internally. With developers—the lifeblood of Microsoft's ecosystem—showing signs of unease, the company's ability to reclaim its AI leadership in coding remains uncertain. Hanselman's own journey, from nearly leaving to championing OpenClaw, underscores the urgency to adapt.