Microsoft’s $1 Billion Bet on OpenAI Driven by Fear of Lagging Behind Google

In 2019, Microsoft invested $1 billion in OpenAI, driven by concerns of falling significantly behind Google in the realm of artificial intelligence. This is revealed in internal correspondence among the corporation’s top management.

The discussion, titled “Thoughts on OpenAI,” included Microsoft’s CTO Kevin Scott, CEO Satya Nadella, and co-founder Bill Gates. The letter was published as part of the US Department of Justice’s antitrust case against Google.

“We are several years behind our competitors in terms of machine learning scale,” Scott wrote on June 12, 2019.

He detailed how it took Microsoft engineers six months to replicate Google’s BERT language model and train it. The corporation’s infrastructure struggled with this task, noted the CTO.

Scott admitted that he initially underestimated the achievements of OpenAI and Google DeepMind in AI. However, he quickly became enthusiastic when it came to natural language processing models.

“As I tried to understand the gap between Google and us in model training capabilities, I became very, very worried,” wrote Microsoft’s CTO.

According to Scott, some of Google’s early AI models helped the company gain a competitive edge over Bing. He also praised the autocomplete features in Gmail, which “became frighteningly good” in 2019.

Scott’s concerns prompted Nadella to take an interest in OpenAI. He forwarded the correspondence to Microsoft’s CFO Amy Hood with the words “this is why I want to do this.”

The letter is heavily redacted. It appears to be a response to Nadella or Gates, who left Microsoft’s board in 2020. However, the co-founder still plays a significant role in the company’s affairs.

As reported by Business Insider, Gates has regularly met with OpenAI’s leadership since 2016. He also helped broker a multibillion-dollar deal between the companies.

To date, Microsoft’s investments in OpenAI have exceeded $13 billion. The corporation has integrated the startup’s models into Office applications, the Bing search engine, the Edge browser, and the Windows operating system.

Through targeted investments and innovations, Microsoft has made an impressive leap, transforming from a potential underdog into a leader in artificial intelligence, dispelling the leadership’s concerns from five years ago.

Recently, Nadella identified AI and security as the two main focus areas for Microsoft in 2024 and beyond. This indicates that the corporation will continue to actively incorporate artificial intelligence features into its products.

In April, Microsoft reported a shortage of cloud infrastructure for AI.