Microsoft has undergone a major shake-up, merging its Windows and Surface divisions under a new leader, Pavan Davuluri, as the company prepares for a focus on "AI PCs." This move follows frustrations from the top indicating that the previous split between the divisions was not successful. Additionally, Mustafa Suleyman, co-founder of DeepMind, has been hired by CEO Satya Nadella to oversee Microsoft's consumer AI push as CEO of Microsoft AI. This hiring suggests that the previous shake-up involving Windows and AI did not have the desired outcomes. The combination of Windows and Surface is expected to bring clarity to Microsoft's AI efforts for Windows.