Image: © HTGanzo/Stock.adobe.com
Concerns within Microsoft of being ‘multiple years behind the competition’ may have pushed the tech giant into the investment, which eventually sparked the surge in generative AI witnessed today.
A newly revealed email from 2019 suggests Microsoft’s investment into OpenAI began out of concern about Google’s growing dominance in the AI sector at the time.
A highly redacted email was recently revealed as part of a US Justice Department antitrust case against Google, Business Insider reports. This email – titled “Thoughts on OpenAI” – shows comments from Microsoft’s CTO Kevin Scott in June 2019 – a few months before Microsoft invested $1bn into the AI start-up.
In the email to Microsoft founder Bill Gates and CEO Satya Nadella, Scott commented on OpenAI, DeepMind and Google Brain – particularly the “scale of their ambition” in various areas. He said that he was initially “highly dismissive” of their work into reinforcement learning – a field of machine learning that helps AI achieve “optimal outcomes in unseen environments” according to Amazon Web Services.
“When they took all of the infrastructure that they had built to build NLP [natural language processing] models that we couldn’t easily replicate, I started to take things more seriously,” Scott said. “As I dug in to try to understand where all of the capability gaps were between Google and us for model training, I got very, very worried.”
Scott said that Google’s auto-complete function in Gmail was getting “scarily good” and said Microsoft was “multiple years behind the competition” in terms of machine learning.
Nadella forwarded this email to Amy Hood, Microsoft’s chief financial officer, and said the email explained “why I want us to do this”.
Microsoft and OpenAI
Following this email, it appears Microsoft prepared to invest heavily into OpenAI to get a larger piece of the artificial intelligence pie. This began as a $1bn investment at the end of 2019 but a second major investment was made in 2021.
The significance of these investments can’t be understated – OpenAI was one of the sparks of the generative AI surge the tech sector has witnessed in recent years, thanks to the massive initial success of its generative AI chatbot, ChatGPT.
In 2023, Microsoft continued its focus on OpenAI with a fresh investment of up to $10bn. This means the tech giant had invested roughly $13bn into OpenAI by early 2023.
The two companies have been in close partnership and Microsoft has used OpenAI’s technology to add AI-powered services across its ecosystem, challenging Google in this sector. The results have been clear for Microsoft, as its profits have surged in recent years. It also briefly became the most valuable company in the world and surpassed the $3trn valuation milestone, a feat that had previously only been achieved by Apple.
What’s next?
The partnership between Microsoft and OpenAI doesn’t appear to be slowing down anytime soon, as the global focus on AI is bigger than ever. Reports from the end of 2023 suggest OpenAI is looking for more funding to develop a “superintelligence” AI.
But while the partnership with OpenAI and the focus on this technology has been a boon for Microsoft, it could also spell legal trouble in the future. Both companies were sued by The New York Times last year, as the media outlet claims AI models are being trained on millions of copyrighted articles.
Eight more US newspapers have taken legal action against Microsoft and OpenAI over similar claims, which suggests these legal troubles could spiral for the tech giant.
Find out how emerging tech trends are transforming tomorrow with our new podcast, Future Human: The Series. Listen now on Spotify, on Apple or wherever you get your podcasts.
