Microsoft Balances AI Expansion with Trademark Defense Amid Cloud Growth Challenges
Jan/30/2025
Microsoft’s Azure cloud business posted 31% growth last quarter, falling at the lower end of projections as data center capacity constraints slowed expansion, leading to a 4.5% drop in after-hours trading. CEO Satya Nadella acknowledged the disruptive impact of China’s DeepSeek AI model but framed its cost-efficient techniques as an industry shift that could ultimately benefit Microsoft’s cloud and PC businesses. While OpenAI—Microsoft’s key AI partner—has accused DeepSeek of improperly leveraging its outputs, Microsoft has taken a pragmatic approach by making DeepSeek’s R1 model available on Azure. As the company aggressively invests in AI infrastructure, with capital expenditures surging to $22.6 billion last quarter and an expected $80 billion in spending this fiscal year, it is also actively protecting its intellectual property. On January 29, Microsoft requested additional time in the U.S. to examine potential opposition against two trademarks, 'CARTE' and 'CARTP', filed by Altered Security Pte Ltd for cybersecurity education and training services. While AI-driven services now generate over $13 billion in annualized revenue and contribute 13 percentage points to Azure’s growth, non-AI cloud customers faced service delays, weighing on broader cloud performance. Despite these challenges, Microsoft remains bullish on AI monetization, aggressively integrating Copilot into its software ecosystem and betting on premium enterprise subscriptions to drive future growth while simultaneously maneuvering legal and market complexities to solidify its foothold in cybersecurity and cloud services.
