AI tensions: Microsoft and OpenAI relationship

There's an ongoing narrative that Windows is worse than ever today and people are leaving in droves. Paul does not see that, and will simply point to Windows 8 and remind folks that it can be (and was) worse. Also, PowerToys 0.98 adds a major new feature to Command Palette, big changes to Keyboard Manager and CursorWrap, and about 100 other updates. This is a big one. Plus, Mozilla Firefox is staging a comeback and may be worth another look.

Windows

• Rajesh Jha is retiring and Microsoft is reorging its Experiences + Devices team
• Release Preview: A peek at next week's Week D update (and April's Patch Tuesday) shows we're getting improvements to Narrator, Settings, Smart App Control, Pen settings, Display, File Explorer, and the Windows Recovery Environment (WRE). The trend continues!
• New Canary, Dev, and Beta builds - Nothing new in Canary. Dev/Beta: Drag Tray is being renamed to Drop Tray, you can change the user folder name during Setup, Restore points are getting a modern update finally
• Intel goes nuts with new "Arrow Lake refresh" processors; these are not Copilot+ PC capable and it's unclear what the Panther Lake comparison looks like
• IDC now expects 11.3 percent decline in PC market in 2026, 7.6 percent decline for tablets

AI

• Microsoft may sue OpenAI for contract breach - the best Microsoft divorce since IBM
• Major reorg in Microsoft's AI businesses
• Former Snap exec in charge of consolidated Copilot offerings across consumer and commercial
• Mustafa Suleyman to focus on Microsoft's foundational models
• There has been a lot of retiring and a lot of outside hires for top-level executive positions in Microsoft over the past year or more. Curious.
• Rumors vs. reality in Microsoft scaling back AI ambitions in Windows
• Rumor: Microsoft is backtracking on some Copilot features
• Reality: Microsoft is not backtracking on its AI ambitions, it's just going to try to do a better job with branding and positioning
• Microsoft launches Copilot Health in the U.S.
• Google Personal Intelligence ships in the U.S.
• OpenAI releases GPT-5.4 mini and nano models
• GPT-5 mini is available as a reasoning model on Duck.ai

Xbox and gaming

• Rumor vs. reality in Xbox strategy
• Rumor: Microsoft removed "This is an Xbox" messaging from website so it must be focusing on consoles again
• Reality: Literally nothing has changed
• Xbox Insiders is testing per-game Quick Resume toggle
• Also more groups on Home, custom colors, profile badges in guide
• Big half month for Game Pass, with Resident Evil 7: Biohazard, more coming
• Starfield is coming to PS5 on April 7
• NVIDIA launches DLSS 5, changes existing games, people are freaking out

Tips and picks

• Tip of the week: The grass is always greener
• App pick of the week: PowerToys 0.98
• RunAs Radio this week: Sustainable AI with Darshna Shah
• Brown liquor pick of the week: Teeling Small Batch Whiskey

Hosts: Leo Laporte, Paul Thurrott, and Richard Campbell

Download or subscribe to Windows Weekly at https://twit.tv/shows/windows-weekly

Check out Paul's blog at thurrott.com

The Windows Weekly theme music is courtesy of Carl Franklin.

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