Microsoft said Tuesday that it’s bringing together the engineering groups for its commercial and consumer Copilot assistants, which have yet to gain broad adoption.

Jacob Andreou, a former Snap executive who works in Microsoft’s artificial intelligence unit, will become an executive vice president in charge of the consumer and commercial Copilot experience, CEO Satya Nadella wrote in a memo to employees.

Andreou will report to Nadella. Executives Ryan Roslansky, Perry Clarke and Charles Lamanna, who will also report to Nadella, will lead Microsoft 365 applications and the Copilot platform, Nadella wrote.

The Copilot moves will free up executive Mustafa Suleyman, a former co-founder of AI lab DeepMind that Google bought in 2014, to focus more on building new models.

“The next phase of this plan is to restructure our organization to enable me to focus all my energy on our Superintelligence efforts and be able to deliver world class models for Microsoft over the next 5 years,” Suleyman wrote in a memo. “These models will enable us to build enterprise tuned lineages that help improve all our products across the company.”

Since arriving at Microsoft through the Inflection deal in 2024, Suleyman has spent time working on Copilot for consumers, among other initiatives.

Microsoft’s Copilot app had 6 million daily active users in February, while OpenAI’s ChatGPT had 440 million and Google’s Gemini had 82 million, according to data from app analytics company Sensor Tower.

Sensor Tower said that so far in March, Anthropic’s Claude, which has gotten extensive media attention because of Anthropic’s standoff with the U.S. Department of Defense, has reached 9 million daily users, while Copilot still stands at 6 million.

Microsoft incorporates generative AI models from Anthropic and OpenAI. About 3% of commercial users with Office productivity software subscriptions have access to the Microsoft 365 Copilot add-on. Google is pushing Gemini to both consumers and corporations.

In November, Microsoft announced the formation of a superintelligence group under Suleyman, who said Tuesday that frontier model development has always been his main focus and passion.

He said he will “stay directly involved in much of the day-to-day operation” of the broad Microsoft AI group that includes products such as the Bing search engine.

Google controlled 90% of search engine market share in February, while Bing had about 5%, according to estimates from web analytics company StatCounter.

“We are doubling down on our superintelligence mission with the talent and compute to build models that have real product impact, in terms of evals, COGS reduction, as well as advancing the frontier when it comes to meeting enterprise needs and achieving the next set of research breakthroughs,” Nadella wrote.

The shake-up comes as pressure mounts on software companies to show a return on AI investments, as investors worry that the models could disrupt software incumbents.

The iShares Expanded Tech-Software Sector Exchange-Traded Fund is down about 19% so far this year, with Microsoft falling 17% in that period.

Microsoft is constructing models for generating source code, images and audio, and for reasoning, which produces answers that people can find more thoughtful but requires more time, Suleyman said.

At the same time, Microsoft will keep drawing on OpenAI intellectual property. In October, Microsoft said it has IP rights for OpenAI models and products through 2032.

“I’m genuinely thrilled about this change precisely because most of the future value is going to accrue to the model layer, and my job is to create highly COGS-optimized, highly efficient enterprise specific model lineages for Microsoft over the next three to five years,” Suleyman said in an interview, using the acronym for cost of goods sold. “That is singularly the objective, precisely because the model is the product, right? That is the future direction of all the IP.”

WATCH: Microsoft shifts from OpenAI exclusivity and expands its AI basket

Anthropic’s Claude artificial intelligence assistant app jumped to the No. 2 slot on Apple’s chart of top U.S. free apps late on Friday, hours after the Trump administration sought to block government agencies’ adoption of the startup’s technology.

The rise in popularity suggests that Anthropic is benefiting from its presence in news headlines, stemming from its refusal to have its models used for mass domestic surveillance or for fully autonomous weapons.

“The Leftwing nut jobs at Anthropic have made a DISASTROUS MISTAKE trying to STRONG-ARM the Department of War, and force them to obey their Terms of Service instead of our Constitution,” President Donald Trump wrote in a Friday Truth Social post.

Department of Defense Secretary Pete Hegseth said he asked that Anthropic be labeled as a supply-chain risk to national security, and therefore, no U.S. defense contractor would be able to draw on Anthropic tools.

“It is the Department’s prerogative to select contractors most aligned with their vision,” Anthropic CEO Dario Amodei said in a statement. “But given the substantial value that Anthropic’s technology provides to our armed forces, we hope they reconsider.”

Historically, other AI chat apps have been more popular among consumers than Claude. OpenAI’s ChatGPT sat at No. 1 on the App Store rankings on Saturday, while Google’s Gemini was at No. 3.

The Claude iOS app has gained momentum this month. On Jan. 30, it was ranked No. 131 in the U.S., and it bounced around the top 20 for much of February, according to data from analytics company Sensor Tower. The data shows ChatGPT has held on to the No. 1 spot for most of February.

In the past year, Anthropic — which was formed in 2021 by former OpenAI employees — has gained momentum as a supplier of models for coding and general corporate use. OpenAI, whose ChatGPT now has over 900 million weekly users, has been responding to Anthropic’s surge in business by striking partnerships with consulting firms such as Accenture and Capgemini.

On Friday night, OpenAI CEO Sam Altman said the startup had reached an agreement with the U.S. Defense Department on the deployment of its models.

Hours later, pop singer Katy Perry posted a screenshot of Anthropic’s Pro subscription for consumers, with a heart superimposed over it.

WATCH: Sec. Pete Hegseth directs Pentagon to designate Anthropic supply-chain risk

Software stocks made a comeback on Tuesday after Anthropic hosted its enterprise agents event, where it revealed new partnerships, quelling some investor fears that the sector could be displaced by artificial intelligence.

The AI startup launched new updates to Claude Cowork that allow companies to integrate the productivity tool into a host of enterprise apps, such as Salesforce-owned Slack, Intuit, Docusign, LegalZoom, FactSet and Google‘s Gmail.

Organizations can also deploy customizable plugins across sectors like financial analysis, engineering and human resources, Anthropic said.

Salesforce shares jumped 4% following the Anthropic announcement while Docusign and LegalZoom each gained more than 2%. Thomson Reuters‘ stock surged more than 11% and FactSet shares rose nearly 6%.

Analysts at Wedbush Securities said in a Tuesday research note that Anthropic’s event showed the competition risk to software from AI is “overblown.”

They argued that models aren’t capable of replacing entire workflows that remain “deeply embedded” in software infrastructure.

“The reality is that these new AI tools will not rip and replace existing software ecosystems and data environments with these AI tools only as useful as the data it can reach,” the analysts wrote.

Anthropic’s recent product rollouts have sent software and cybersecurity stocks tumbling in recent weeks as investors digested the looming threat of AI tools to those business models.

CrowdStrike closed largely flat Tuesday, but many of those stocks climbed higher. Okta and Cloudflare rose about 2%. Zscaler and Tenable each gained about 4% and SentinelOne climbed 3%.

IBM shares sold off heavily on Monday after Anthropic touted a tool that could automate aspects of a programming language run on IBM’s computers. IBM’s stock rebounded Tuesday, climbing more than 2%.

— CNBC’s Ashley Capoot and Kate Rooney contributed reporting to this story.

AI robots will exceed the working population within a few decades as more firms adopt AI agents and continue to squeeze costs, a former Citi executive warned on Monday.

Rob Garlick, Citi Global Insights’ former head of innovation, technology, and future of work, told CNBC’s “Squawk Box Europe” that as leaders continue to prioritize profitability, their human workers will be left in the dust.

“We have a leadership system in the economic terms and business terms that celebrates profitability,” Garlick said in a conversation with CNBC’s Steve Sedgwick and Ben Boulos.

“When you marry profitability up with the technology progress, we have the biggest trade in history coming, which is basically that artificial intelligence will be able to do more and more, better and better, cheaper and cheaper, and that will be able to substitute for people.”

Garlick, who recently authored “AI – Anarchy or Abundance? Why the Future of Work Needs Pro-Human Leaders,” explained that his previous research at Citi showed that the number of AI robots is going to skyrocket as a result of these business decisions.

“We’re going to go over the next couple of decades to more moving robots than the working population, and then you add on agents, little agents, and it is going to explode,” he added.

AI robots ranging from humanoids to domestic cleaning robots and autonomous vehicles are forecasted to increase to 1.3 billion by 2035, according to a 2024 Citi report led by Garlick. The number of AI robots would quickly increase to over 4 billion by 2050, per the insights.

The Citi report even measured how long it would take for a robot to pay for itself through the money saved by replacing a human worker, for example, a $15,000 robot would break even in 3.8 weeks for a $41 an hour human job, or 21.6 weeks for a $7.25 human job. Meanwhile, a robot that costs $35,000 would have a payback time of 8.9 weeks for a $41 an hour human job.

“You can already buy a humanoid today, which gives you a payback period versus human workers of less than 10 weeks,” Garlick told CNBC, citing a figure from his book. “Humans can’t compete on this basis.”

Microsoft’s Work Trend Index report showed that 80% of leaders expect AI agents to be largely integrated into their AI strategy within the next 12 to 18 months. AI agents are a type of software program that can make decisions and complete tasks without much human direction.

Meanwhile, McKinsey & Company’s global managing partner, Bob Sternfels, noted that the company currently employs 20,000 agents alongside 40,000 humans, in an interview with Harvard Business Review. A year prior, the company only had 3,000 agents, and Sternfels predicts that in 18 months from now, there will be an equal number of employees and agents.

Tesla CEO Elon Musk also shared similar views at the World Economic Forum’s flagship conference in Davos last month, saying that AI will likely surpass human intelligence by the end of this year.

“My prediction is, in the benign scenario of the future, that we will actually make so many robots in AI that they will actually saturate all human… there will be such an abundance of goods and services because my prediction is that there’ll be more robots than people,” Musk said.

Fears around AI replacing workers have mounted in the past year as major firms, including Amazon, Salesforce, Accenture, Heineken, and Lufthansa, have cited the technology as part of the reason for eliminating thousands of roles.

Kristalina Georgieva, managing director at the International Monetary Fund, told CNBC in January that AI is “hitting the labor market like a tsunami” and warned that “most countries and most businesses are not prepared for it.”

In the U.S., AI played a role in almost 55,000 layoffs in the U.S. in 2025, according to December data from consulting firm Challenger, Gray & Christmas.

However, some leaders are striking a more positive tone. Nvidia’s CEO Jensen Huang predicts that the “AI boom” will create six-figure salaries for the workers building AI and chip factories. Huang said the technology will boost skilled trade work, such as for plumbers, electricians, construction, and steel workers.