Microsoft bets big on ChatGPT creator in race to dominate AI

CADE METZ & KAREN WEISE

When a chatbot called ChatGPT hit the internet late last year, a number of Silicon Valley companies worried they were suddenly dealing with new artificial intelligence technology that could disrupt their businesses. But Microsoft celebrated: For several years, its CEO Satya Nadella had been putting the pieces in place for this moment.

Microsoft invested $3 billion in OpenAI, the tiny San Francisco company that designed ChatGPT, which paid for the huge amounts of computing power that it needed to build the chatbot. It meant Microsoft could rapidly build and deploy new products based on the tech.

Microsoft is now poised to challenge competitors like Google, Amazon and Apple with a technological advantage the company has not possessed for more than two decades.

It is in talks to invest another $10 billion as it seeks to push its technology further. The potential deal has not been finalised. But the talks are indicative of the tech giant’s determination to be on the leading edge of what has become the hottest technology in the sector.

Nadella worked with AI technologies when he ran Microsoft’s Bing search engine more than a decade ago, and for several years he has convened a biweekly internal meeting of AI leaders.

“The expectation from Satya is that we’re pushing the envelope in AI, and we’re going to do that across our products,” Eric Boyd, the executive responsible for Microsoft’s AI platform team, said in an interview.

ChatGPT answers questions, writes poetry and riffs on almost any topic tossed its way. Based on earlier technologies called GPT-3 and GPT-3.5, it is the most conspicuous example of generative artificial intelligence, the term for a system that can generate text, images, sounds and other media in response to short prompts.

“It has already been a home run partly because Satya was prescient enough to make the bet three years ago, and because all applications will be generative in the future,” said Matt McIlwain, a managing partner at Madrona Venture Group.

The new generative AI technologies could reinvent everything from search engines like Google to digital assistants like Alexa and Siri.

“It is just fascinating to see how these generative models are capturing the imagination,” Nadella told developers in India last week, adding, “I think it is a golden age.”

Built using Microsoft’s huge network for computer data centers, the new chatbot could be a system much like ChatGPT that solely generates text. Or it could juggle images as well as text. Some venture capitalists and Microsoft employees have already seen the service in action. But OpenAI has not yet determined whether it will be released with capabilities involving images.

OpenAI is led by Sam Altman, the head the start-up builder Y Combinator. Altman (37) and his co-founders created OpenAI in 2015 as a nonprofit, but soon remade it as for-profit.

A year later, Microsoft invested $1 billion and committed to building the supercomputer technologies OpenAI’s enormous models would demand while becoming its “preferred partner for commercialising” its technologies. OpenAI later licensed its technologies to Microsoft, allowing the company to add them to its products and services.

With backing from Microsoft, OpenAI went on to build a milestone technology called GPT-3. Known as a “large language model,” it could generate text on its own, including tweets, blog posts, news articles and even computer code.

Microsoft, Google, Meta and other companies have been reluctant to release many of these technologies because of the potential damage to their established brands. Five years ago, Microsoft quickly backtracked after releasing a chatbot called Tay that generated racist, xenophobic and otherwise filthy language.