Microsoft is pulling back on its AI assistant suite. The company is merging its separate consumer and business Copilot apps into a single application — and in the process it is killing off a set of "less-used" features. Microsoft's Group Chat (multi-user AI chat), AI-generated Podcasts, Deep Research and experimental Copilot Labs features will sunset on Aug. 18, and all related generated content will be removed. Users who want to keep their group chats or podcasts must export them by that date.
Copilot's mascot is going too: Mico, the blob-like animated character that lived inside the assistant as an AI companion, is being removed. Microsoft says Mico will get a new home on a much less-used platform, Learn Live, where the character will work as a tutor.
Microsoft says the changes are meant to "create a simpler, more cohesive experience for everyone." The context, though, is hard to ignore: a report from The Information late last year revealed that Microsoft had significantly reduced its AI-related sales targets as Copilot lost market share to AI tools from OpenAI, Google and Anthropic. The company is also dialing back Copilot inside Windows, reportedly removing it from several Windows 11 apps, starting with Notepad.
For analysts, the consolidation is an admission of sorts: after racing to stuff AI into everything, Microsoft is now retreating to a leaner product — a sign that even the richest AI vendors are trimming their offerings as the fight for paying users intensifies. It's part of a broader 2026 trend: after years of feature wars, AI companies are beginning to retire the features that didn't stick.
