SEATTLE—As artificial intelligence reshapes the tech landscape, Microsoft Corp. CEO Satya Nadella is spearheading a profound internal rethink of the company’s business model. According to an internal memo obtained by Business Insider, Nadella has enlisted a key adviser to dissect and reimagine the ‘new economics of AI,’ drawing parallels to Microsoft’s transformative shift during the early cloud computing era. This move comes amid growing skepticism about AI’s immediate returns and escalating costs in data centers and infrastructure.

The memo, dated November 2025, highlights Nadella’s concern that the current AI boom requires a fundamental reboot, much like the company’s pivot to cloud services under his leadership a decade ago. ‘We need to rethink the new economics of AI,’ Nadella wrote, emphasizing the need for innovative pricing models and operational efficiencies to sustain growth. This initiative is not just about cost-cutting but about positioning Microsoft to lead in an era where AI agents could redefine software consumption and enterprise value.

A Strategic Pivot Echoing Cloud Origins

Business Insider reports that Nadella has tapped longtime adviser and economist Susan Athey, a Stanford professor and former Microsoft chief economist, to lead this effort. Athey’s role involves analyzing how AI’s computational demands and energy consumption are altering economic paradigms, potentially leading to new revenue streams beyond traditional per-user licensing.

This rethink is timely, as Microsoft faces pressure from investors questioning the profitability of massive AI investments. In a recent interview with eWeek, Nadella debated the future of AI, stressing the importance of data centers and autonomous agents. He noted, ‘We’re at the beginning of a new platform shift,’ underscoring Microsoft’s $13 billion investment in OpenAI and its integration into products like Azure and Copilot.

Investor Skepticism and Market Realities

However, not all is optimistic. The Motley Fool highlighted Nadella’s recent comments as ‘bad news’ for AI investors, pointing to his acknowledgment of scaling law debates and potential plateaus in AI progress. ‘Just in the last multiple weeks, there’s a lot of debate of have we hit the wall with scaling laws,’ Nadella said at Microsoft’s Ignite conference, as posted on X by investor Dan Niles. This candor reflects broader industry doubts about whether AI’s hype matches its economic output.

Bloomberg detailed the complications in Microsoft’s OpenAI partnership, with Nadella navigating ‘nervous customers and a volatile partnership.’ In a May 2025 feature, Nadella discussed efforts to stabilize relations amid regulatory scrutiny and competition from rivals like Google and Amazon. He emphasized, ‘AI is the most consequential technology of our time,’ but admitted the path to monetization remains challenging.

Reimagining Pricing in an Agentic World

Central to Nadella’s strategy is a shift from per-user to per-agent pricing, as revealed in a Yahoo Finance interview. ‘Satya Nadella says Microsoft is thinking about charging “per agent” rather than “per user” as more companies embrace agentic AI,’ the outlet reported. This model could transform how enterprises deploy AI, with agents handling tasks autonomously, potentially collapsing traditional app layers.

Posts on X from industry observers like Rowan Cheung amplify this vision. In a discussion with Nadella at Build 2025, he unpacked Microsoft’s push toward an ‘agentic web,’ where AI managers oversee fleets of intelligent agents. Nadella predicted, ‘The application layer is collapsing into agents,’ signaling a future where 95% of code might be AI-generated, fundamentally altering software economics.

Infrastructure Challenges and Global Ambitions

Microsoft’s AI ambitions are not without hurdles. A DNYUZ article echoed Business Insider’s memo, noting Nadella’s call for a ‘reboot’ akin to the cloud era. With AI data centers demanding gigawatts of power—each potentially costing $50 billion, as per a Substack post by Michael Parekh—Microsoft is investing heavily but cautiously. Nadella’s strategy includes incorporating OpenAI’s chip designs into Microsoft’s semiconductors through 2030, as reported by India Today.

Yet, setbacks loom. Implicator.ai described Microsoft’s ‘$100 Billion Retreat,’ where the company froze 3.5GW of AI capacity in 2024, shifting some workloads to Oracle. Nadella reframed this as strategic flexibility, avoiding overcommitment to outdated tech. In an X post by Tropical Value, Nadella outlined a ‘cautious, long-term approach to cloud infrastructure’ to evade lock-in to single-generation technologies.

Human Element in an AI-Driven Future

Amid these economic recalibrations, Nadella addresses workforce implications. An X post by Amanda Goodall critiqued Microsoft’s AI agent strategy: ‘Don’t train people… then act shocked when you choose to cut them?’ Nadella has countered such concerns, emphasizing AI as a tool for augmentation. In a Wired interview from 2023, updated in context, he bet everything on AI, stating, ‘I can’t imagine life without artificial intelligence—even if it’s the last thing invented by humankind.’

Fortune noted Nadella’s role as ‘communicator-in-chief’ during AI fears, urging the industry to abandon ‘zero-sum’ thinking. As posted on X by Byul, Nadella advocates for broad technology diffusion to drive GDP growth. He warns against hype, telling Garry Tan on X, ‘AI should be judged by real economic surplus—is it moving GDP?’ This pragmatic view tempers expectations, suggesting AI’s impact might unfold over 25 years, compressing the Industrial Revolution’s timeline.

Broadening AI’s Economic Horizon

Looking ahead, Nadella questions AI’s current value proposition. Computing.co.uk reported his February 2025 acknowledgment that ‘despite AI improvements, the technology is still not delivering for business and consumers.’ This aligns with his push for memory, agents, and tool use over mere model scaling, as shared on X.

Microsoft’s partnership ecosystem is evolving too. Bloomberg highlighted tensions with OpenAI, but Nadella remains committed, integrating their tech into Azure. An X post by Haider noted Microsoft AI CEO Mustafa Suleyman’s prediction: ‘By the end of 2025, models will move from one-shot answers to continuous planning,’ heralding deeply human-like AI through compute scale.

Navigating Regulatory and Ethical Waters

As Microsoft rethinks its AI economics, regulatory pressures mount. Nadella’s involvement in White House AI discussions, as per Fortune, underscores education and ethical deployment. He departs from zero-sum mentalities, pushing for inclusive growth.

Ultimately, Nadella’s adviser-led reboot signals Microsoft’s adaptive prowess. By crediting sources like Business Insider for the memo and weaving in insights from Bloomberg, eWeek, and X posts, this deep dive reveals a company poised to redefine AI’s economic playbook, balancing innovation with fiscal prudence.