From the wall Street Journal, June 12:
After landing the deal that launched his company to the front of the artificial-intelligence race, the tech chief is spreading his bets. Will it be enough?
Chief Executive Satya Nadella bet the future of Microsoft on the potential of artificial intelligence when he forged a groundbreaking partnership with OpenAI, the creator of ChatGPT.
But Nadella is not content to simply rely on OpenAI to dominate in this new era. In recent months, he’s been spreading his bets, turning the world’s biggest company into the world’s most aggressive amasser of AI talent, tools and technology. He has hunted down new partners around the globe and invested in a range of AI startups, including pouring $1.5 billion into an Abu Dhabi-based firm in April.
Nadella has also begun building what amounts to an in-house OpenAI competitor inside Microsoft—potentially putting it on a collision course with its most important partner.
To lead Microsoft’s AI efforts, he recruited Mustafa Suleyman, a longtime rival of OpenAI’s co-founder, Sam Altman. Suleyman, who helped launch DeepMind, a pioneering AI research firm, and went on to co-found Inflection AI, an AI startup, has brought most of his team from Inflection with him to Microsoft.
The new employees have led the process to train their own artificial-intelligence model, built on technology developed at Inflection and designed to be on par with the OpenAI technology Microsoft depends on today. A person familiar with the matter said that some future Microsoft AI products could be switched from OpenAI technology to the model being developed by Suleyman’s team.
Nadella’s approach to AI is emblematic of his decade at the helm, during which he has repeatedly reinvented big parts of Microsoft, picking new partners and retooling the tech company. He has been able to spot when one-time company strengths became vulnerabilities and upend even his own strategies.
Nadella’s moves have helped Microsoft leapfrog others—most notably the longtime AI front-runner Google—to release AI chatbots and workplace tools expected to change how people think and work. The question is whether these tactics will be enough to keep Microsoft ahead of the pack in artificial intelligence.
Google has dramatically overhauled its AI organization and put out products that rival those made by the OpenAI-Microsoft consortium, including an AI feature atop its dominant search engine. Meta Platforms has been investing billions into a powerful AI language model, Llama, that it is releasing for free under an open source license. Amazon has invested $4 billion in Anthropic, which it hosts on the largest cloud computing platform in the world.
This week, Apple announced it was integrating OpenAI’s tech into its mobile operating system, further shaking up the competitive landscape for AI dominance.
Microsoft’s rising status has made it a target for regulators and competitors. Regulators are investigating its acquisitions and investments, worried it may already have too much control of the emerging AI market. The Federal Trade Commission recently launched an investigation into whether Microsoft’s Inflection deal was structured to avoid government antitrust review. That came on top of another FTC probe launched in January of other artificial-intelligence deals, including Microsoft’s relationship with OpenAI. Companies including the New York Times are suing Microsoft and OpenAI, alleging that they illegally trained their software on the media companies’ content.
And despite a soaring stock price, company morale has struggled as outsiders have been brought in to reshape aspects of its technology.
Mikhail Parakhin, the previous head of Microsoft’s Bing and advertising businesses, plans to leave the company after initially being assigned to report to Suleyman, according to people familiar with the matter. Saurabh Tiwary, who oversaw the team of AI engineers responsible for integrating OpenAI’s tech into Bing, has already left for Google.
Microsoft said its retention rates are high and that some bumpiness is to be expected when companies make organizational changes....
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