Iran's government "wants to charge the world's largest tech companies for using the subsea internet cables laid under the Strait of Hormuz," reports CNN. Their article also notes that Iran's state-linked media outlets "have vaguely threatened that traffic could be disrupted if firms don't pay." Lawmakers in Tehran discussed a plan last week which could target submarine cables linking Arab countries to Europe and Asia. "We will impose fees on internet cables," Iranian military spokesperson Ebrahim Zolfaghari declared on X last week. Iran's Revolutionary Guards-linked media said Tehran's plan to extract revenue from the strait would require companies like Google, Microsoft, Meta, and Amazon to comply with Iranian law while submarine cable companies would be required to pay licensing fees for cable passage, with repair and maintenance rights given exclusively to Iranian firms. Some of these companies have invested in the cables running through the Strait of Hormuz and the Persian Gulf, but it's unclear if those cables traverse Iranian waters. It's also unclear how the regime could force tech giants to comply, as they are barred from making payments to Iran due to strict US sanctions; as a result, the companies themselves may view Iran's statements as posturing rather than serious policy. Still, state-affiliated media outlets have issued veiled threats warning of damage to cables that could impact some of the trillions of dollars in global data transmission and affect worldwide internet connectivity... Iran's threats are part of a strategy to demonstrate its leverage over the Strait of Hormuz and ensure the survival of the regime, a core objective for the Islamic Republic in this war, said Dina Esfandiary, Middle East lead at Bloomberg Economics. "It aims to impose such a hefty cost on the global economy that no-one will dare attack Iran again," she said. The article notes that subsea cables "carry vast internet and financial traffic between Europe, Asia and the Persian Gulf," and that targetting them "would affect far more than internet speeds, threatening everything from banking systems, military communications and AI cloud infrastructure to remote work, online gaming and streaming services." CNN spoke to Mostafa Ahmed, "a senior researcher at the United Arab Emirates-based Habtoor Research Center, who published a paper on the effects of a large-scale attack on submarine communications infrastructure in the Gulf." Armed with combat divers, small submarines, and underwater drones, the Islamic Revolutionary Guard Corps (IRGC) poses a risk to underwater cables, Ahmed said, adding that any attack could trigger a cascading "digital catastrophe" across several continents. Iran's neighbors across the Persian Gulf could face severe disruptions to internet connection, potentially impacting critical oil and gas exports as well as banking. Beyond the region, India could see a large proportion of its internet traffic affected, threatening its huge outsourcing industry with losses amounting to billions, according to Ahmed... Any disruption could also slow financial trading and cross-border transactions between Europe and Asia, while parts of East Africa could face internet blackouts. And if Iran's proxies decide to employ similar tactics in the Red Sea, the damage could be far worse.

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Microsoft’s aggressive, multi-billion-dollar push into artificial intelligence was supposed to be a flawless victory. The integration of Copilot into Windows 11, Microsoft 365, and GitHub was designed to usher in a new era of agentic computing. Yet, beneath the polished keynote presentations and massive infrastructure investments, a dramatically different reality is what we saw.

As first reported by Windows Latest, according to a highly respected former Microsoft executive, the company’s AI strategy is fundamentally failing to connect with real users, spurring calls for a massive internal “factory reset.”

The executive in question is Mat Velloso, who was most recently the Vice President of Product for the Developer Platform at Meta’s Superintelligence Labs. He also led AI developer products at Google DeepMind (including the Gemini API and Google AI Studio). But before his stints at Google and Meta, Velloso spent over 12 years at Microsoft, where he served as a Partner Director managing AI innovation in Windows and, interestingly, spent four years as the Technical Advisor to Microsoft CEO Satya Nadella.

When someone with Velloso’s resume, having observed the AI arms race from the highest levels of Microsoft, Google, and Meta, says Microsoft has “missed the AI wave,” it can rip the lid off the deep tensions within Redmond.

Ex-Microsoft exec says Microsoft missed the AI wave

Microsoft’s behavior over the last few months is nothing short of shocking. Both the Windows and Xbox divisions suddenly started prioritizing user feedback and implementing requested features after years of ignoring them.

It’s also not a small task to assemble and organize OEMs, ODMs, and chipset vendors in an event like WinHEC that had its last occurrence almost a decade ago (2018).

Explaining this sudden pivot to listening to customers, Velloso remarked that despite making Bing the company’s biggest AI bet, it failed to capture a single percentage point of search market share from Google. More damning is the state of Copilot.

According to Velloso, less than 3% of paying users actively use Copilot, even though Microsoft has pre-deployed it directly into the Windows 11 taskbar and across the Office suite.

Out of Microsoft’s 450 million Microsoft 365 user base, the company has only managed to convert roughly 15 million paid Copilot seats. This means a staggering 96.7% of users are rejecting the premium AI features, yielding just a 3.3% paid adoption rate. When viewed against Microsoft’s estimated $37.5 billion quarterly AI spending, this is an alarmingly low adoption rate.

But it’s not just software; Velloso also called out the current state of AI hardware. Over the past year, Microsoft has heavily pushed OEMs to include Neural Processing Units (NPUs) in their latest laptops to power advanced Windows 11 capabilities. We have tracked Microsoft’s push for NPU-powered AI features in Windows 11, but as Velloso noted, OEMs invested heavily in NPUs only to find out that “nobody cares because not a single valuable usecase was built for those in Windows/Office.”

Furthermore, he highlighted that GitHub, a platform that should be thriving as the centerpiece of the AI coding revolution, has seen its Service Level Agreement (SLA) reliability drop below 90%. Combine this with rising Cost of Goods Sold (COGS) and shareholders beginning to ask difficult questions, Microsoft was forced to start listening to customers because the AI bet isn’t paying off as smoothly as anticipated.

Microsoft’s executive exodus

All this friction appears to be taking a toll on Microsoft’s leadership. Recently, news broke that Julia Liuson, the highly respected head of Microsoft’s Developer Division (DevDiv), was retiring after 34 years with the software giant.

While official channels framed this as a standard retirement, Mat Velloso critiqued the news, saying, “Looks like Microsoft just went from hit refresh to hit factory reset.” He also listed a massive string of high-profile departures and reassignments across the company, including leaders from Xbox, GitHub, AI Infrastructure, Teams, and OneNote.

This public commentary drew the ire of Frank X. Shaw, Microsoft’s Lead Communications executive. Shaw replied to Velloso, defending the departing executives and accusing Velloso of jamming a “negative frame” onto normal corporate retirements.

All Velloso had to do was point out the harsh financial realities that the market is currently digesting. He moved from Microsoft to Google in early 2024, and while Google’s shares surged by roughly 230%, Microsoft’s stock growth remained essentially flat at 0%.

“I suppose the whole market is also wrong about this,” Velloso fired back. “But what do I know? I only saw both companies, how they operate, their strengths and their flaws. Microsoft missed the internet wave, the mobile wave and now it missed the AI wave. It is what happens when you keep doing the same things expecting different results.”

He urged Microsoft’s leadership to stop “gaslighting,” deflecting blame, and burying skeletons, arguing that hitting a complete internal “factory reset” is the only pragmatic way to fix the hard problems plaguing the operating system and enterprise software stack.

OpenAI is cutting out the middleman (Microsoft)

Apart from the internal challenges, Microsoft is increasingly being affected by its closest allies. The company has staked its entire generative AI future on its multi-billion-dollar partnership with OpenAI. However, OpenAI is rapidly building out its own enterprise infrastructure, threatening Microsoft’s historic dominance in the corporate sector.

Just days ago, OpenAI officially launched the “OpenAI Deployment Company” (DeployCo), a new business unit backed by over $4 billion in initial investment from global firms. This new venture features 150 “Forward Deployed Engineers” (FDEs) tasked with embedding directly into Fortune 500 companies to help them build and deploy custom AI solutions.

Historically, this hands-on, enterprise-level consulting was Microsoft’s bread and butter. As Velloso reminisced about his early career as a consultant, he noted that Microsoft’s incredible penetration into large enterprises was built on “armies of people spending time, listening, understanding business goals and solving them with technology in every industry vertical.”

Now, top AI labs like OpenAI are replicating this same playbook. They no longer want to delegate enterprise deployment to hyperscalers like Microsoft Azure. By cutting out the middleman and owning the direct relationship with businesses, OpenAI is stepping directly into the highly lucrative services layer where the real enterprise AI dollars are headed. This presents a huge structural threat to Microsoft’s long-term enterprise revenue, especially as users continue to push back against forced Copilot web app integrations.

Why Microsoft is far from dead: “The moat is unbreakable”

Despite these severe criticisms, Velloso defended his former employer against apocalyptic tech media narratives. When a prominent tech publication recently claimed that “AI is killing Microsoft” and compared their current trajectory to the disastrous 2008 era, Velloso stepped in to shut the narrative down.

“Nope, they are not dying,” Velloso stated. “I know I criticize them a lot and that’s because I care, but boy if you think Microsoft is dying you haven’t watched how many times they recovered from problems.”

He pointed out that while AI startups and labs might be building flashy deployment companies, completely replacing legacy enterprise software is incredibly difficult. When asked about companies claiming they can fully automate software businesses, Velloso recommended talking to Fortune 500 CIOs to see how realistic that really is.

“There’s a reason why all the top AI labs are hiring large consulting teams,” he explained. “The last mile is the hardest and Microsoft has the best distribution for that. Their moat is unbreakable.”

This is the ultimate paradox of Microsoft in 2026. They are simultaneously struggling to convince users to adopt their new AI features, yet their foundational grip on the enterprise ecosystem is still solid. Millions of businesses depend on Active Directory, Azure, Office, and Windows. While it is easy to spin up an AI agent in Python, integrating it securely into a legacy corporate environment requires the kind of massive distribution network that Microsoft has spent four decades building.

A necessary wake-up call

All the “new” features in Windows 11, including the much-awaited movable taskbar and resizable Start menu, are a result of everything that went wrong in the company and leadership finally doing something about it.

When a company realizes that pushing a 3.3% adoption-rate AI chatbot down users’ throats isn’t translating to stock growth or user satisfaction, they are compelled to reconsider their strategy.

We are finally seeing the results of this “factory reset” in real time. Microsoft is dismantling sluggish web wrappers, committing to native UI performance for Windows 11 apps, overhauling driver quality standards, and explicitly prioritizing long-ignored user feedback.

Microsoft’s pivot back to platform fundamentals proves that while AI might be the future, you cannot build that future on a crumbling foundation. The market forced Microsoft to listen, and for frustrated Windows users, that is arguably the best thing that could have possibly happened.

The post Former Microsoft VP says Microsoft missed the AI wave like the internet and mobile, as Copilot scales back in Windows 11 appeared first on Windows Latest

Test scores "are lower than they were a decade ago in school districts across the U.S.," reports Times magazine, citing new data released Wednesday by Stanford researchers. "Reading scores were down roughly 0.6 grades in 2025 compared to 2015, and math scores were down about 0.4 grades. This means that students were 60% of one school year behind where their peers were in reading a decade earlier and 40% of one school year behind in math." But Stanford's announcement notes that America's schools "were in a 'learning recession' for seven years before the COVID-19 pandemic, with student test scores in math and reading on a steady decline since 2013." This reversal ended two decades of progress, according to Sean Reardon, the Professor of Poverty and Inequality at Stanford Graduate School of Education, whose data forms the backbone of the new research... The study reframes the narrative of pandemic-era learning loss, arguing that the crisis of the last few years was an acceleration of a problem that was already underway. "The pandemic was the mudslide that followed seven years of erosion in student achievement," said Professor Tom Kane, faculty director of the Center for Education Policy Research at Harvard University, and a lead author of the report... The study found that the slowdown in learning coincided with two major shifts in American childhood and education policy: the widespread dismantling of test-based accountability systems that defined the No Child Left Behind era and the rise of social media use among young people. Reading scores, in particular, suffered consistently, with the average annual loss in the years just before the pandemic being just as large as the loss during it... Today, 8th-grade reading scores on national assessments are at their lowest point since 1990. Compounding the problem, chronic student absenteeism remains a major obstacle to improving learning. Though down from its pandemic peak, 23 percent of students were chronically absent in the 2024-25 school year, far above the pre-pandemic rate of 15 percent. More context from Time magazine: Reading scores were down roughly 0.6 grades in 2025 compared to 2015, and math scores were down about 0.4 grades. This means that students were 60% of one school year behind where their peers were in reading a decade earlier and 40% of one school year behind in math... "The decline started around the time that social media's use among teens was exploding, and this was also occurring in a number of other countries," says Thomas Kane, one of the authors of the Educational Scorecard report and a professor at Harvard University... [H]e maintains that it is at the core of the decline in reading achievement. He points out that social media use was shown to be heaviest among the lowest achieving students. "Some states and school districts are making progress," notes the Associated Press, "largely by shifting toward phonics-based instruction and providing extra support for struggling readers." And "The picture is also brighter in math. Almost every state in the analysis saw improvements in math test scores from 2022 to 2025."

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It's tough to get graduating students excited about a future shaped by artificial intelligence.

Get caught up on the latest technology and startup news from the past week. Here are the most popular stories on GeekWire for the week of May 10, 2026.

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Are statistical programmers coalescing around a handful of popular languages? That's the question asked by the CEO of software assessment site TIOBE, which every month estimates the popularity of programming languages based on their frequency in search results: This month, the programming language R matched its all-time high by reaching position #8 in the TIOBE index once again. This is not a coincidence. The statistical programming language market is clearly undergoing a major consolidation. The biggest winners are Python and R, while many long-established alternatives continue to lose momentum. The era in which the statistical computing landscape was fragmented across many niche languages and platforms appears to be coming to an end. Several established players are steadily declining: — MATLAB is close to dropping out of the TIOBE top 20. — SAS is about to leave the top 30 for the first time since the TIOBE index began. — Wolfram/Mathematica remains well below its historical peak and is losing further ground. — SPSS dropped out of the top 100 last month.... Elsewhere in the index, Java and C++ swapped positions this month. Java gained momentum following the successful release of Java 26. Another notable riser is Zig, which is approaching the TIOBE top 30 for the first time. Zig's growing popularity appears to be driven by its rare combination of low-level performance, straightforward tooling, and relative ease of use compared to traditional systems programming languages. Their estimate for the most popular programming languages in May: PythonCJavaC++C#JavaScriptVisual BasicRSQLDelphi/Object Pascal The five next most popular languages on their rankings are Fortran, Scratch, Perl, PHP, and then Rust at #15. Rust is up for positions from May of 2025 — while Go has dropped to #16, seven ranks lower than its May 2025 position of #7.

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