MicrosoftDid you lose your magic again?

This week, Satya Nadella kicked off Microsoft's annual Build developer conference with typical bragging about new products and a sunny outlook on AI. The focus of his speech was on how Microsoft was going gaga for agentic AI. But there was a cloud over the gathering at Fort Mason in San Francisco, and I'm not talking about Azure.

While its competitors' valuations and stock prices have soared, Microsoft's stock has declined this year. Its workplace AI products, which like just about everything at Microsoft are now called Copilot, have been disappointingly successful. And although the company was an early leader in coding tools, Anthropic took the lead with its revolutionary agentic approach to coding. Microsoft responded by terminating its Claude Code licenses to force its developers to use Copilot.

Meanwhile, GitHub, the valuable code repository and Microsoft subsidiary, experienced unprecedented downtime that led longtime fans to complain or even defect. A Reddit post put it bluntly: “Has GitHub become a dumpster fire? » For Microsoft, losing the hearts and minds of the coding community would be tantamount to disaster. Remember former CEO Steve Ballmer’s famous summary of what kept the company moving forward? Developers! Developers! Developers!

Scott Hanselman is a Microsoft vice president who is part of the GitHub technical team. He has spent countless hours talking to developers, training engineers, and evangelizing GitHub and AI. It also sits right in the middle of Microsoft's late efforts to seize the agent moment. Late last year, he considered leaving the company after 18 years to teach high school science. But in November, it was supercharged by the agent coding revolution launched by Claude Code and OpenClaw. He helped introduce the latter, which is open source, to Microsoft. At the Build conference, he participated in Nadella's keynote, demonstrating how the company's "co-pilots" could automate tasks for coders, workers, and anyone else.

Hanselman seemed the ideal spokesperson to explain what's going on at Microsoft. After establishing itself as a leader in the generative AI era three years ago, has Microsoft lost its momentum? (This interview has been edited for clarity and brevity.)

STEVEN LEVY: GitHub users have been complaining about frequent downtime lately. Some have left. What's going on there?

SCOTT HANSELMAN: Remember when social media was flooded with bots, or 20 years ago when emails were flooded with spam? Inbound traffic to and usage of GitHub represents as many bots as people. GitHub, I think, does a great job of scaling to meet this need, but the bots are very, very fast. I think it's just a setback.

How do we convince developers that this is just a setback and not a sign of complacency?

It's easy to say it's down right now, but people forget that it's up 99% of the time. It's just under enormous pressure from the robots.

Microsoft's biggest announcement at Build was about agents and their adoption of OpenClaw, through a product called Scout. You helped make this happen and even brought OpenClaw founder Peter Steinberger into the process.

It's just one of those things that happens when people talk about open source. Last year, OpenClaw started it all. I created a small Windows application, Satya found it exciting and I started talking to people. Microsoft had been thinking about agents on Windows for a very long time, and I thought, "This is a great opportunity for us, why not take it?" »

Did you go down the coding agent rabbit hole last November with everyone else?

It was an intense time for nerds. I spent a lot of time talking to coding agents over this vacation. And it’s been a real rocket since then.

Claude Code seems to have had the thunder there, beating Codex, and frankly, Copilot. A few years ago, Microsoft's Copilot coding tool seemed to be leading the pack. Now it's Claude Code.

I would respectfully disagree. Coding patterns are one of them, but Microsoft is a great place for developers. Windows is an open platform on open hardware on which users can create anything.

Microsoft wants Scout to be adopted by productivity workers and even consumers. AI agents make mistakes and hallucinate. How many mistakes will people tolerate?

That's a good question. I don't know. Trust but verify. Give it a small task, then try it and see if it works. And then, "Oh, he didn't do anything wrong. I'll give him read-only access to something." For example, when I tell someone that I gave OpenClaw access to my blood sugar, because I have type 1 diabetes, there is a knee-jerk reaction: "How dare you give an agent access to your health data?" It is very useful for me to receive proactive notifications about my blood sugar. I don't think it's a controversial thing.

I understand, but right now many people are skeptical or hostile to AI.

When a new tool is introduced, whether it's a chainsaw, a power tool, or an internal combustion engine, there's a chaotic period during which people figure out how to make that thing good for humans. Personally, I am not entirely in favor of AI, because I vote with my feet. I don't use AI image generation, or AI video generation, because I don't believe in those things. I use AI for coding and find it a joy.

Yes, coders love agents, but outside of that community there is resistance. Microsoft has seen this in the underperformance of its AI productivity tools. Do you anticipate similar headwinds with agentic AI?

They will either like it or they will not like it. I remember when the Walkman came out and people were like, "No one is going to wear those things on their head. Those headphones look ridiculous." Now we're all walking around with these white cotton swabs dangling from our ears.

Don't you feel that Microsoft is in catch-up mode?

I would like to respectfully respond and point out that everyone is in catch-up mode, because you're moving forward and then you're going back and forth. It's a war of thumbs. I remind people that the term "Copilot" was created by Microsoft first, and this term has become like Kleenex.

Do you think this year's developer conference put Microsoft back in the running?

A few Mac users were hanging out with me backstage watching the Surface Laptop Ultra announcement. They saw all the new developer tools, and they reluctantly looked at us and said, "Damn, you're going to make me buy a Surface, aren't you?"

Are the Fort Mason trash cans full of MacBook Airs now?

This would be an amazing result, although I would hate to produce more ecological waste.

This is an edition of Steven Levy's Backchannel newsletter. Read previous newsletters here.