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Microsoft Invested in OpenAI Due to Concerns of Lagging Behind Google in AI

ByHuey Yee Ong

May 4, 2024
Microsoft Invested in OpenAI Due to Concerns of Lagging Behind Google in AI

Microsoft Invested in OpenAI Due to Concerns of Lagging Behind Google in AI

Microsoft’s $1 billion investment in OpenAI in 2019 was primarily driven by concerns that Google had significantly advanced in AI development, according to internal communications revealed in a US Justice Department antitrust case.

The disclosed emails between Microsoft CTO Kevin Scott, CEO Satya Nadella, and co-founder Bill Gates highlight Microsoft’s anxieties about being “multiple years behind” Google in AI technology, particularly in natural language processing and machine learning infrastructure.

In the email dated June 12, 2019, Scott detailed the challenges Microsoft faced in replicating Google’s BERT language model, a task that took six months due to inferior infrastructure. This struggle illuminated significant gaps in Microsoft’s capabilities compared to Google, especially noted in areas where Google’s AI had already begun to enhance its products, such as the autocomplete features in Gmail.

Scott initially underestimated the AI advancements at OpenAI and Google DeepMind, considering their early projects more as technical stunts than practical developments. However, his perspective shifted significantly as these organizations began focusing on more sophisticated applications like natural language processing, leading to a deep concern about Microsoft’s position in the competitive landscape.

Reacting to Scott’s insights, Nadella forwarded the email to Microsoft CFO Amy Hood with a note emphasizing the strategic importance of investing in OpenAI. Hood, responsible for managing Microsoft’s financial strategies, was pivotal in aligning the investment with the company’s fiscal policies.

Further complicating the narrative, the email thread, released on Tuesday and notably redacted, indicates ongoing discussions within Microsoft’s top leadership about the investment since as early as 2016, with Bill Gates playing a crucial role despite his resignation from the board in 2020 amid personal controversies.

Since the initial investment, Microsoft has significantly increased its stake in OpenAI, with total investments exceeding $13 billion. These funds have integrated OpenAI’s innovations into Microsoft’s product suite, including Office applications, Bing, Edge, and the Windows operating system, repositioning Microsoft as a leader in AI technology.

Recently, Nadella prioritized AI and security as Microsoft’s top two areas of focus for 2024 and beyond, indicating that the integration of AI features into Microsoft products will continue at full throttle.

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Featured Image courtesy of Justin Sullivan/Getty Images

Huey Yee Ong

Hello, from one tech geek to another. Not your beloved TechCrunch writer, but a writer with an avid interest in the fast-paced tech scenes and all the latest tech mojo. I bring with me a unique take towards tech with a honed applied psychology perspective to make tech news digestible. In other words, I deliver tech news that is easy to read.

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