OpenAI’s ChatGPT is rapidly moving from exciting novelty to enterprise cornerstone—and channeling a rapidly evolving power dynamic in the process.
Microsoft officials announced Monday that customers of the tech titan’s Azure cloud are getting broad access to generative AI technology developed by OpenAI, including the systems behind the ChatGPT chatbot and DALL-E 2 text-to-image generator. Microsoft initially made much of OpenAI’s technology available through Azure in late 2021, but access was granted to a limited number of users.
The development marks a rapid escalation of Microsoft’s push into generative AI, illustrating its ambitions to integrate OpenAI technology across the company. Microsoft is OpenAI’s “preferred partner” for commercializing the startup’s technology after investing $1 billion in the equipment in 2019. WealthJessica Mathews and Jeremy Kahn reported this month that Microsoft has since invested another $2 billion in the company and is considering an additional investment of up to $10 billion.
The offer should increase the attractiveness of Microsoft’s Azure offering, the world’s second-largest cloud computing platform, as it competes with market leader Amazon Web Services and third-ranked Google. Microsoft’s Azure customers will soon be able to incorporate OpenAI offerings into their own applications, helping them automate repetitive tasks, write basic text, and analyze large databases, among other tasks.
“Large language models are quickly becoming an essential platform for people to innovate, apply artificial intelligence to solve big problems, and imagine what’s possible,” Eric Boyd, Microsoft’s corporate vice president of AI platforms, wrote Monday.
Microsoft’s move raises several questions for the future: Will generative artificial intelligence really prove profitable? When will Google start commercializing its own advanced AI products? Is Microsoft acting responsibly by releasing a generative AI technology that its creators call “incredibly limited”?
But for now, I want to look back at how we got to this point and what it says about Big Tech’s impact on machine learning.
While OpenAI is hardly a rags-to-riches story — it started as a nonprofit with $1 billion in committed funding from tech giants like Elon Musk and Peter Thiel — its operations bear the hallmarks of a scrappy startup. The company generates minimal revenue, employs only a few hundred people and preaches the welfare of “all mankind”. (Insert Silicon Valley meme here.)
But while the Jeff Bezoses and Mark Zuckerbergs of yore could gradually develop their products over time, relying on gradually increasing amounts of venture capital funding before going public, high-level machine learning technology requires huge investments in computing power up front. It also cannot be easily commercialized without large business partners.
On the other hand, organizations with deep pockets, broad business interests, and vast computing infrastructure—namely Microsoft, Amazon, and Google—are well-positioned to gobble up innovators in need of support. Namely, OpenAI has decided to take Microsoft’s money, an undisclosed portion of which comes in the form of Azure credits, in exchange for early roles in its technology. Blockchain startup ConsenSys struck a similar deal in early 2022, albeit at a lower price.
“The Microsoft partnership is one of OpenAI’s secrets to success – we work very closely with Azure to produce an AI training and serving infrastructure that can adapt to our cutting-edge (and completely unprecedented!) needs,” OpenAI President and Co-Founder Greg Brockman tweeted last month.
Big tech behemoths using their money and power to squeeze out the competition is hardly a new concept. Almost a decade ago, Google reportedly spent more than $500 billion to buy AI pioneer DeepMind, which had just started turning a modest profit. At the same time, many ambitious AI companies are taking the old-fashioned route, staying independent and using their venture capital fund to cover infrastructure vendor costs.
But if Microsoft manages to extract gold from its relationship with OpenAI, the success story could pave the way for deeper big tech investments in AI, further concentrating power in the hands of a few. As DeepMind founder Humayun Sheikh said in 2020: “Commercializing any AI-based company is very difficult, unless you’re absorbed by a large corporation.”
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Back on the road. Chinese transportation company Didi announced on Monday that Chinese regulators lifted the ban on registration of new users, ending one of the most aggressive moves by government officials to take down the republic’s tech industry, Bloomberg reported. The decision paves the way for Didi, China’s largest ride-hailing company, to return to app stores after an 18-month absence. The decision marks another sign that the Chinese have softened their two-year assault on domestic tech companies.
More trouble for Microsoft. Antimonopoly officers of the European Union are an early step is expected in the coming weeks according to objection Microsoftis planning a $68.7 billion acquisition of the video game developer Activision Blizzard, Reuters reported on Monday, citing sources familiar with the matter. The European Commission is preparing a statement of objections outlining the body’s competition concerns over the deal. Microsoft had hoped to prevent a statement of objections before the EU’s mid-April deadline to formally block the purchase.
Hashtag without filter. A months-long investigation by the Federal Election Commission did not provide evidence that Google intentionally pushed more GOP fundraising emails into spam folders than solicitations from Democrats, The Wall Street Journal reported on Tuesday. Federal officials concluded that any disproportionate filtering of Republican emails sent to Gmail was unintentional, prompting them to close the case. Leading Republican organizations filed the complaint with the commission after an academic study found that GOP messages were far more likely to end up in spam folders than those sent by Democrats.
Winter surprise. Apple exposed her the latest line of MacBook Pro laptops on Tuesday, a rare January unveiling of new products from the tech giant, The Verge reported. The updated MacBook Pro will be equipped with Apple’s M2 chips, the company’s most powerful processors developed in-house. Apple’s latest MacBook Pro line, released in late 2021 and equipped with M1 chips, helped boost notebook sales after years of modest growth compared to the company’s other products.
FOOD FOR THOUGHT
The target turns. It does Target and Mark Zuckerberg Have your market mojo back? Shares of parent Facebook and Instagram have quietly rebounded from a swoon, rising roughly 50% since early November, even as investors remain skeptical of the company, Bloomberg reported Tuesday. The meta has ranked as the S&P 500’s best performer over the past three-plus months, recovering from a sharp decline caused by a lack of third-quarter earnings and a disappointing fourth-quarter outlook. However, Meta’s continued commitment to investing billions in virtual reality and metaverse-related technology continues to cloud investor sentiment.
Even after the jump, Meta is trading for less than half its average price-to-earnings multiple over the past decade and is one of the cheapest stocks in the Nasdaq 100 index. Its shares are still 64% below their 2021 record, and analysts on average expect the stock to gain just 7.7% over the next 12 months.
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BEFORE YOU GO
Taking off the white gloves. Disneyis in frosty relations with the activist investor. The entertainment conglomerate ihe issued a surprisingly brilliant statement Tuesday vs Trian Partners co-founder Nelson Peltzwhich launched a proxy battle last week aimed at removing the CEO Bob Iger, CNBC reported. In the securities filing, Disney officials said Peltz has “no experience in large equity or technology” and “no solutions to offer for the evolving media environment,” accusing him of not understanding the company’s business. Peltz complained about Disney’s corporate governance and Iger’s $71 billion acquisition of 21st Century Fox, which contributed to the stock’s poor performance. Disney shares are trading about 35% below their pre-pandemic peak.