This was an important year for Microsoft:it added approximately a half-trillion dollars to its market valuationand cemented its lead as the worlds leading generative AI (genAI) company. But 2024 has also been a transitional one for the company, as the US government increasingly turns its focus on reining in Big Tech.As always, Microsoft was in and out of the news throughout the year (sometimes for good, sometimes not). These are the five most important hits and misses the company faced.Microsoft goes all in on Copilot for Microsoft 365Microsoft became more than a $3 trillion company this year, thanks not to Windows or the cloud its valuation soared because its now an all-out genAI company.This past year, it completed the integration of its core genAI product Copilot into Microsoft 365 (for additional user subscription fees, of course). A rollout that began in late 2023 to larger enterprises continued in early January, whenMicrosoft released versions for businesses of all sizes and for individuals.The results were mixed.I found the technology useful for creating first drafts in Word and PowerPointand a potential big time-saver, although the quality of its writing often left something to be desired. I also found it Copilot had a tendency to hallucinate that is, make things up meaning its output needed to be double-checked. While adept at summarizing conversation threads in Outlook, it wasnt particularly useful in Excel.Presumably, Copilots quality will improve, because so much money is at stake. Think of it this way: at the start of 2024, Microsoft had 400 million subscribers to Microsoft 365. If only 10% of thoseusers subscribe to Copilot, Microsoft could rake in an additional $12 billion a year in revenue.Though Microsoft hasnt released information about the total number of Copilot for Microsoft 365 subscribers, its clear it could become one of the companys biggest cash cows and portends financial good times to come.Blistering security criticism burns Microsoft againThe year brought another serious round of criticism of Microsofts lax approach to security. In April, the US Department of Homeland Security (DHS) excoriated sloppy security practices thatallowed Chinese spies to hack into the accounts of high-level government officials in charge of the countrys relationship with China. Among the officials who got burned: US Commerce Secretary Gina Raimondo, Ambassador to China Nicholas Burns, and Rep. Don Bacon (R-NE).Ablistering 29-page DHS report detailed the companys security failures, and pointed to the cascade of Microsofts avoidable errors that allowed this intrusion to succeed. The report said Microsofts security infrastructure is so weak that it failed to detect the compromise of its cryptographic crown jewels on its own, relying instead on a customer to reach out to identify anomalies the customer had observed.The reports conclusion: Microsofts security is inadequate and requires an overhaul.Microsoft promised it would change. But weve been through this before, and the government hasnt done anything about it in the past. I dont expect this time to be different.Thumbs down on Copilot+ PCsfor nowIn an genAI-driven world, you need a PC built from the ground up to get the most from the technology. Orso Microsoft argued when it unveiled the Copilot+ PC line mid-year. The company might well have a point, but it has yet to prove it.The first wave of Copilot+ PCs were underwhelming and overpriced. Although they had AI coprocessors onboard, its not clear why, because Copilot+ PCs were launched without what the company claimed was the best reason for buying them the Recall feature that was supposed to let you find any file, email, or web site you visited in a snap. That feature was so insecure that Microsoft pulled it before Copilot+ PCs were released.Jeff Pollard, vice president and principal analyst at Forrester,toldComputerworld,I think a built-in keylogger and screen-shotter that perfectly captures everything you do on the machine within a certain time frame is a tremendous privacy nightmare for users. Hes right. Since then, though, Microsoft has reworked the feature, andhas begun offering a public preview of it.Even more confounding:the AI technology on Copilot+ PCs is less powerful than the one on regular PCs, unable to do some basic Windows tasks for you, such as turning dark mode on or off.Microsoft is right that PCs with AI coprocessors are better suited for then rapidly advancing technology than PCs without them. But Copilot+ PCs arent those machines. One day, every PC shipped will likely have onboard AI coprocessor. But were not there yet.The Feds target Microsoft for antitrust violationsUntil November, Microsoft had managed to avoidthe antitrust investigations and prosecutions targeting much of Big Tech. Amazon, Meta, Google and Apple were all slapped with serious actions that threaten the core of their respective businesses. Google, for example, might be split up after the US Federal Trade Commission won alawsuit claiming the company violated antitrust lawby actions it took to protect its search business.Microsoft might get whacked, as well. In late November,the FTC launched a wide-ranging investigation into the companys AI, cloud computing, security and Teams products. The agency is focusing on ways in which Microsoft bundles cloud computing products and Teams with its office and security products, as well as whether its gaining too much market dominance in AI.Its not clear yet whether the FTC will eventually prosecute Microsoft, and whether any action against the company would be allowed to proceed once Donald Trump takes over as president in January. (See below for more about Trump and Microsoft.) But if the prosecution does move forward, it could be as problematic for the company as the Department of Justices Windows antitrust suit in 1998 that sent the company into a 15-year tailspin.Trump wins the presidential electionThe biggest wildcard for Microsoft came late in the year with Trumps election, which has potential long-rangeconsequences for its AI plans, as well as the cloud, Teams, and more. Trump could squashantitrust actions against Microsoft or double-down on them. He could award billions of dollars in government contracts to the company or rescind them. He could use the power of the bully pulpit to badmouth Microsoft or praise it.Theres no way to know what the president-elect might do; Trump himself often doesnt seem to know. With him, everything is personal. Stroke his ego and good things happen. Criticize him and hell loose the power of the government against you.Since his election,most of Big Tech has been busy doing the former. Meta, AI and OpenAIs CEO Sam Altman have all given $1 million donations for his inauguration. Google CEO Sundar Pichai, Google founder Sergey Brin and Apple honcho Tim Cook have had dinners with him. Jeff Bezos has plans to do so soon, and also killed aWashington Postendorsement of Vice President Kamala Harris in the run-up to the election.So far, Microsoft CEO Satya Nadella has kept Trump at arms length. All the better for him, and for Microsofts culture and values. Doing that has been one of the best things hes done all year. Well have to see whether there will be consequences for it in 2025, or whether Nadella gives in.