Emails reveal that Microsoft’s billion-dollar investment in OpenAI was prompted by concerns about competition from Google

In 2019, Microsoft made a significant investment of $1 billion in OpenAI due to concerns about Google’s dominance in AI technology. An internal email exchange between Microsoft CTO Kevin Scott, CEO Satya Nadella, and co-founder Bill Gates sheds light on the discussions leading up to the partnership. The email, titled “Thoughts on OpenAI,” was released as part of the ongoing US Justice Department antitrust case against Google.

Scott expressed his concerns about Microsoft lagging behind in machine learning scale compared to its competitors. He highlighted how it took six months for Microsoft engineers to replicate Google’s BERT language model and train it because their infrastructure was not equipped for the task. This revelation clearly indicated that Microsoft needed to catch up with Google in the field of AI.

Initially, Scott admitted to downplaying OpenAI and Google DeepMind’s AI efforts, particularly in the realm of game-playing stunts. However, his perspective shifted when he observed the advancements in natural language processing models. As he delved deeper into understanding the differences in capabilities between Google and Microsoft for model training, Scott became increasingly worried about Microsoft’s position in the AI race.

Scott acknowledged that some of Google’s early AI models had given the company a competitive advantage over Bing, Microsoft’s search engine. He even praised Google’s autocomplete features in Gmail, noting that they were “getting scarily good” in 2019. This further emphasized the need for Microsoft to invest in AI and bridge the gap between itself and Google.

Nadella responded to Scott’s concerns by forwarding the email to Microsoft CFO Amy Hood, highlighting the urgency of the situation and his support for the investment. Hood, responsible for overseeing the company’s financial goals and expenditure, played a crucial role in evaluating the investment opportunity.

The redacted email thread indicates ongoing discussions between Nadella, Gates, and possibly other key members of Microsoft’s leadership team. Despite Gates’ departure from the Microsoft board in 2020, he remained involved in Microsoft’s relationship with OpenAI. Reports suggest that Gates had been regularly meeting with OpenAI since 2016 and played a crucial role in brokering the deal with Microsoft. However, the exact initiator of the 2019 discussion about OpenAI remains unclear.

Since the investment, Microsoft has not only deepened its relationship with OpenAI but also integrated their AI models into various products and services. These include Office applications, Bing search engine, Microsoft Edge, and the Windows operating system. This strategic collaboration has helped Microsoft establish itself as a leader in AI technology and overcome its previous fears of falling behind Google.

Nadella has recently declared AI and security as the top two areas of focus for Microsoft beyond 2024, signaling the company’s commitment to continued integration of AI features across its products. This move further solidifies Microsoft’s position as an innovative leader in AI-driven technologies.

In conclusion, Microsoft’s $1 billion investment in OpenAI in 2019 was driven by concerns about Google’s advancements in AI technology. The internal email exchange revealed the company’s realization of its lagging position and the urgent need to catch up. By collaborating with OpenAI and integrating their models across multiple products and services, Microsoft has successfully positioned itself as a prominent player in the AI field. The company’s commitment to AI and its recent focus on AI-driven solutions indicate that Microsoft’s AI journey is far from over.



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