Microsoft’s annual shareholder meeting Friday played out as if on a split screen: executives describing a future where AI cures diseases and secures networks, and shareholder proposals warning of algorithmic bias, political censorship, and complicity in geopolitical conflict.

One shareholder, William Flaig, founder and CEO of Ridgeline Research, quoted two authorities on the topic — George Orwell’s 1984 and Microsoft’s Copilot AI chatbot — in requesting a report on the risks of AI censorship of religious and political speech.

Flaig invoked Orwell’s dystopian vision of surveillance and thought control, citing the Ministry of Truth that “rewrites history and floods society with propaganda.” He then turned to Copilot, which responded to his query about an AI-driven future by noting that “the risk lies not in AI itself, but in how it’s deployed.”

In a Q&A session during the virtual meeting, Microsoft CEO Satya Nadella said the company is “putting the person and the human at the center” of its AI development, with technology that users “can delegate to, they can steer, they can control.”

Nadella said Microsoft has moved beyond abstract principles to “everyday engineering practice,” with safeguards for fairness, transparency, security, and privacy.

Brad Smith, Microsoft’s vice chair and president, said broader societal decisions, like what age kids should use AI in schools, won’t be made by tech companies. He cited ongoing debates about smartphones in schools nearly 20 years after the iPhone.

“I think quite rightly, people have learned from that experience,” Smith said, drawing a parallel to the rise of AI. “Let’s have these conversations now.”

Microsoft’s board recommended that shareholders vote against all six outside proposals, which covered issues including AI censorship, data privacy, human rights, and climate. Final vote tallies have yet to be released as of publication time, but Microsoft said shareholders turned down all six, based on early voting. 

While the shareholder proposals focused on AI risks, much of the executive commentary focused on the long-term business opportunity. 

Nadella described building a “planet-scale cloud and AI factory” and said Microsoft is taking a “full stack approach,” from infrastructure to AI agents to applications, to capitalize on what he called “a generational moment in technology.”

Microsoft CFO Amy Hood highlighted record results for fiscal year 2025 — more than $281 billion in revenue and $128 billion in operating income — and pointed to roughly $400 billion in committed contracts as validation of the company’s AI investments.

Hood also addressed pre-submitted shareholder questions about the company’s AI spending, pushing back on concerns about a potential bubble. 

“This is demand-driven spending,” she said, noting that margins are stronger at this stage of the AI transition than at a comparable point in Microsoft’s cloud buildout. “Every time we think we’re getting close to meeting demand, demand increases again.”

For the last two years, Microsoft’s video game division has been working to meet financial targets that are well in excess of the typical industry standard, which has led to waves of layoffs, canceled projects, and a general perception that the company is scrambling.

These allegations come from a new report from Bloomberg journalists Jason Schreier and Dina Bass, who reported that Xbox has been told it’s expected to work toward a profit margin of 30% across the board.

As far as can be told from outside Microsoft, this is significantly above Xbox’s profit baseline. A typical quarterly report from Microsoft only discloses revenue, but as noted by TweakTown, Xbox head Phil Spencer testified in court in 2022 that “the Xbox business today runs at a single-digit profit margin.”

It’s worth noting that even the biggest game studios usually maintain a profit margin of roughly 20% under typical circumstances. As an example, Xbox subsidiary Activision Blizzard, which runs some of the most popular games-as-a-service in the world today, “only” had a profit margin of 22-to-25% two years ago before Microsoft’s acquisition completed.

Even Sony, Microsoft’s primary competitor in the console space and the makers of the PlayStation 5, reportedly only runs at a 9.5% profit margin. Through that lens, any video game company that’s honestly eyeing a consistent 30% is living in a dream world.

The new financial target reportedly came directly from Microsoft CFO Amy Hood in the fall of 2023, which marked the start of a series of big decisions and policy reversals at Xbox.

Since then, Microsoft has drawn fire for multiple waves of layoffs; reorganized several subsidiaries such as Halo Studios; raised the base MSRP of the Xbox Series X twice so far this year; made moves to phase out physical media; officially ported many of its hit first- and third-party games to PlayStation and Switch; and canceled multiple highly-anticipated game projects such as Rare’s Everwild, a reboot of Perfect Dark, and ZeniMax’s MMO code-named Project Blackbird.

Earlier this month, Microsoft hiked the price of its Xbox Game Pass subscription service, claiming it was part of a significant “upgrade package.” Less relevantly to consumers, it has also allegedly raised the price of Xbox development kits by $500, blaming unspecified “macroeconomic” factors.

Some of that, to be fair, is due to circumstances outside Xbox’s control such as the ongoing chaos over tariffs. This year has been a rough time to be a hardware manufacturer.

Xbox is also apparently locked into at least one more console generation, according to recent interviews with Microsoft’s Sarah Bond. The phrase that keeps coming up is “very premium, very high-end curated experience.” If the recently-released Xbox Ally is any indication, the next-gen Xbox will be something more like an expensive, user-friendly Windows PC than what we’d currently recognize as a game console.

For a while now, though, Xbox has come off like its left hand doesn’t know what the right is doing, which made little sense in the wake of reports that the division was both growing and pulling in increased revenue. If it’s being forced to contend with unrealistic expectations from higher up at Microsoft, however, that would explain the overall sense of disorganization.

This is one of the most infamous types of “creative accounting” in the video game industry: issue an inflated revenue forecast, then blame developers/titles when their games fail to reach those numbers. Square Enix notoriously came under fire for this in the 2010s with releases like the 2013 reboot of Tomb Raider. It was a solid success (3.4 million copies sold), but its publisher wanted a blockbuster, so it regarded the game as a failure. History repeats.

In theory, Xbox ought to be one of the leading voices in video games as a hobby and medium right now, but it’s being forced to burn much of its time and effort in an attempt to meet a profit goal that no company on Earth could expect to reach.

If you’re inclined to believe the rumor that’s been in circulation in Seattle this year, that Microsoft’s current leadership would like to shut down Xbox entirely so it can use those resources for more AI research, this is more data for your theory.