Microsoft has significantly increased compensation for employees in its AI division, with average salaries reaching up to $377,611, which is approximately $120,000 higher than those in the Azure and Cloud divisions. This pay disparity is attributed to a competitive race for AI talent as the company focuses heavily on AI initiatives, including the Copilot AI chatbot and Bing search engine, under the leadership of Mustafa Suleyman, cofounder of DeepMind. Despite facing executive departures to rival firms like Google and Amazon, Microsoft has maintained robust recruitment efforts. An internal spreadsheet revealed that while AI positions command higher salaries, the company has recently implemented salary freezes and reduced bonuses for other departments, leading to potential morale issues among employees. The heightened pay reflects the industry's recognition of AI's critical role in future technology advancements, spurring companies to offer attractive compensation packages to secure top talent. Overall, Microsoft's investment in AI appears to set it apart within the tech industry, as it navigates the challenges of employee retention and competition.