Microsoft’s New Security Chief Replaces Top Execs to Force an AI Overhaul

Microsoft’s cybersecurity business is developing more artificial intelligence (AI) security products, cutting back on some of its more traditional security products, and consolidating engineering teams, which has led to several hundred layoffs, The Information reported Wednesday (July 15), citing unnamed sources.

The company is making these changes to better respond to customer demand for solutions to the threat of AI-powered hacks, and to capture some of the spending that is going to AI firms Anthropic and OpenAI, according to the report.

Reached by PYMNTS, Microsoft declined to comment on the report.

According to The Information’s report, the overhaul is being led by Hayete Gallot, who took over the security business in February. Gallot is prioritizing AI-powered tools such as Microsoft Security Copilot, products that scan code for vulnerabilities and products that help companies monitor their own AI agents.

“The entire industry is getting reimagined from the ground up,” Gallot wrote in an internal Microsoft memo, per the report. “And it will reward the companies that see the shift early, make the hard choices, and execute with discipline. A few months ago, we made those choices. Now we must execute.”

Microsoft Chairman and CEO Satya Nadella wrote in a Feb. 4 blog post that Gallot rejoined Microsoft as executive vice president, security, and would report to him. Gallot had held senior leadership roles at the company for 15 years before moving to Google, where she served as president, customer experience for Google Cloud.

“She brings an ethos that combines product building with value realization for customers, which is critical right now,” Nadella said in the post. “As we shared during our quarterly earnings last week, we have great momentum in security, including progress with Security Copilot agents, strong Purview adoption, and continued customer growth, and we will build on this.”

It was reported Wednesday that Microsoft is intensifying its competitive strategy against OpenAI and Anthropic by positioning its services as a more secure and cost-effective end-to-end alternative for corporate clients.

The PYMNTS Intelligence report “Where Payments Decisions Happen: How Issuer Data Is Powering the Next Era of Commerce” found that 42% of issuers said AI has helped them save more than $5 million from fraud attempts in recent years.