Salesforce and Microsoft

Or is it Salesforce versus Microsoft? The Salesforce and Microsoft relationship is evolving. Or is it devolving?

Earlier this year, Salesforce rebranded its Einstein Copilot to Agentforce. Following this change, co-founder and CEO Marc Benioff criticized Microsoft Copilot, comparing it to the outdated rules-based assistant “Clippy” from Microsoft Office in the 1990s and 2000s.

Benioff’s critiques began on August 28 during the company’s latest quarterly earnings call, where he asserted that Microsoft customers have not seen value from their Copilot investments, referring to it as a “science project.” He reiterated his stance in his Dreamforce keynote, stating that Microsoft Copilot suffers from “a lack of context, skills, and adaptability.”

This raises questions about Salesforce’s relationship with Microsoft. When directly asked, Benioff’s response was tinged with sarcasm: “Very good. I love them. They’re great. An impressive company.” He then recounted several of Microsoft’s historical competitive missteps, even referencing the U.S. government’s antitrust case against the company stemming from its battle with Netscape.

Microsoft chose not to comment on this story. However, in response to Benioff’s criticisms following the late-August earnings call, Jared Spataro, Microsoft’s corporate vice president for artificial intelligence at work, highlighted that both internal and third-party metrics show a doubling of Copilot daily users in the previous quarter, along with a 60% increase in sales, indicating that Copilot adds value in the workplace.

Salesforce reportedly serves about 150,000 customers, while Microsoft boasts an approximately 85% market penetration for productivity applications. This theoretically means that around 127,500 customers could integrate Microsoft 365 with Salesforce for email, calendar, tasks, and contact management. Salesforce claimed more than 25 million end users in 2022, suggesting that approximately 21.5 million users depend on collaboration between Salesforce and Microsoft for their systems to function effectively.

“There’s always noise in the system,” said Ian Kahn, a principal at PwC and leader of the firm’s Salesforce practice. “Frankly speaking, I don’t think our clients care about it. You tune out the noise.”

Rebecca Wettemann, founder of the research and advisory firm Valoir, noted that while she agrees with some of Benioff’s points—such as the underperformance of Copilots and limited customer deployment—many Salesforce customers are hosted on Microsoft’s Azure cloud.

“You’ve got to play both sides,” Wettemann remarked. “You have to be on Azure because it’s one of the biggest public clouds, and people want to be there. But you also have to take potshots at Microsoft. That’s just how it works.”

Salesforce’s AI tools are designed specifically for sales, service, marketing, and e-commerce, integrated within the company’s applications. Users can create agents in Slack, and there are many industry-specific tools tailored for different sectors. In contrast, Microsoft’s Copilots are more generalized and are embedded in various applications, featuring a no-code “wizard” interface to pull in data from multiple sources, including Salesforce. Microsoft recently added Copilot agents, AI assistants that automate and execute business processes.

While there are similarities between Salesforce’s Agentforce and Microsoft’s Copilot, Benioff’s comparisons may not be entirely fair. Salesforce’s AI is more focused on service, sales, and marketing, whereas Microsoft targets productivity for office workers.

That said, this kind of competitive banter is par for the course in the tech industry. As Wettemann pointed out, “If they didn’t make aggressive marketing claims, it wouldn’t be Dreamforce.”