Interview: Salesforce CEO Marc Benioff bashes Microsoft as generative AI threatens his company’s CRM lead

Salesforce CEO Marc Benioff.

Salesforce CEO Marc Benioff isn’t shy about publicly bashing Microsoft, his biggest competitor in enterprise software.

In a B-17 interview this week, he let loose again, blasting Microsoft’s Copilot AI assistant while touting the supremacy of Salesforce AI agents that are rolling out soon.

The broadside was no coincidence. The day before, Microsoft struck a blow at the heart of Salesforce’s prized CRM product. This cloud software helps companies manage customer relationships. Salesforce is the clear leader in this market, but Microsoft has been slowly gaining ground.

On Monday, Microsoft unveiled 10 new AI agents for its CRM offering, Dynamics 365. The announcement came just days ahead of the release of Salesforce’s own AI agent product called Agentforce, which will be generally available on Friday.

In the interview with B-17, Benioff said Microsoft has oversold what its AI tools like Copilot can actually do and said there’s “too much hype and not enough real transformational stories” across the tech industry.

“Microsoft has really disappointed so many of our customers,” Benioff said. “They’ve really done it by delivering a level of hype around their AI solutions.”

The CEO recently said Copilot is inaccurate and “spills corporate data,” calling the tool “Clippy 2.0,” a reference to an infamous 1990s Microsoft Office digital assistant that looked like a paperclip.

“Our customers are going to tell the story here, which is that we have customers who have deployed autonomous agents that are reasoning, taking action, extending their sales and services, marketing organizations, and developing customer relationships,” Benioff told B-17. “Microsoft has been having a hard time really responding with customers who have had any level of success with their AI solutions.”

Microsoft did not respond to a request for comment.

CRM software market share

Microsoft’s Dynamics 365 has been steadily gaining CRM market share in recent years. Back in 2019, Salesforce generated almost $11 billion in revenue from this software, while Microsoft took in about 22% of that with $2.4 billion in CRM software sales, according to IDC.

In the first half of this year, Microsoft’s CRM sales reached $3.2 billion, which was about 31% of Salesforce’s CRM revenue, IDC data shows.

In the interview with B-17, Benioff focused on Salesforce’s continued lead in the CRM market, rather than Microsoft’s creeping gains.

Salesforce’s CRM revenue “far exceeds anywhere Microsoft is in this market,” he said.

Generative AI may change CRM

Generative AI may be a new challenge to Salesforce and especially its lead in CRM software.

“As GenAI changes the way people do things (a recurring theme with major technological shifts), old datasets may become less relevant and require brand new data sets that have yet to be created or even synthetic data,” Rishi Jaluria, a software analyst at RBC Capital Markets, wrote in a recent note to investors.

He cited CRM software, which replaced the physical Rolodex and helped salespeople keep in better touch with their contacts. Salesforce created a centralized system that stores customer interaction histories and sales pipelines and provides data analysis and forecasting on top.

This is mostly structured data that works well in traditional databases and cloud services. In contrast, generative AI is more focused on vast volumes of unstructured data such as real-time behavioral analytics and sentiment analysis.

“As a result, the perceived data advantage from an incumbent CRM vendor may not be as large as believed,” RBC’s Jaluria warned.

Benioff told B-17 he doesn’t think generative AI is disrupting Salesforce’s CRM lead.

“It’s actually making us more relevant than ever because the data and the metadata that you have in your Salesforce systems is what’s going to enable the greatest level of productivity advancement that we’ve seen, which is these agents,” the CEO explained.

Salesforce is second, but Microsoft is first

Earlier this year, Morgan Stanley analysts noted that customers have struggled to fire up generative AI workloads using Salesforce data due to the fragmented nature of the information’s storage. Salesforce’s latest AI offering, Agentforce, is designed to tackle these issues. It helps companies create their own AI agents to assist with tasks such as customer service and sales.

Salesforce’s Data Cloud handles structured and unstructured information. The company’s Einstein GPT technology adds intelligence from AI models, and Agentforce sits on top as the software layer that interacts with end users. This helps Salesforce’s AI “work more easily ‘out of the box,'” the Morgan Stanley analysts wrote.

“We’re scalable. We have the highest level of accuracy and the lowest hallucinogenic rate for any enterprise AI solution. We’re extremely easy to customize,” Benioff told B-17. “We’re deeply integrated into our apps. We use our data and metadata platform to do it. This is really what AI was meant to be.”

In a recent survey of chief information officers, Morgan Stanley highlighted Salesforce as the No. 2 net share gainer of generative AI spending in 2024. The problem for Benioff is that Microsoft came out clearly on top. Morgan Stanley analysts wrote that Microsoft remains overwhelmingly the best positioned to gain share of generative AI spending over the next three years.