The thing about Copilot is that outside of the developer niche, nobody knows the term. The vast majority of Microsoft's customer base will recognise neither the Xbox feature nor the Github product.
In the same way, their .NET naming has never bothered anyone they actually care about selling stuff to. It's a tad annoying for developers, but nothing more than that.
I find the way they renamed their Office products every five years much more baffling. Consumers probably don't care beyond "office" but I'd expect them to protect their business clients from their ever changing names for office products at least.