Correct Grammar

I'm sure you've all used Microsoft Word and in the middle of typing a sentence, a little green squiggly line appears under a word indicating that something is grammatically wrong with the word or sentence that you've just typed. A coworker was typing an email today and got that annoying little squiggly line under the word "you're". Now, the context of the sentence went a little something like this:

You're correct...

So, said coworker right clicked the word "you're" to see what the suggested change was. This is what Microsoft Word suggested:

You is correct...

Who writes these programs? Try this ... open Microsoft Word and type a sentence using the word "it's" (not "its"). Every time I type a sentence with the word "it's" in it, the suggested change is "its". Did the proverbial "they" miss that lesson in grammar class? Even my child knows the difference.