Dive Brief:
- Microsoft is entering into the third phase of its partnership with OpenAI with a multiyear, multibillion-dollar investment to “ensure these benefits are broadly shared with the world,” according to a blog post Monday.
- “In this next phase of our partnership, developers and organizations across industries will have access to the best AI infrastructure, models and toolchain with Azure to build and run their applications,” Microsoft Chairman and CEO Satya Nadella said in the statement.
- Microsoft plans to deploy OpenAI’s models across its enterprise and consumer products, creating new categories of digital experiences for customers. Azure will power all of OpenAI’s workloads and Microsoft plans to build out Azure’s AI infrastructure so customers can build and deploy AI applications at scale.
Dive Insight:
The expanding partnership between Microsoft and OpenAI has implications for the future of both entities as well as businesses across industries, according to experts.
For OpenAI, Microsoft’s support and financial backing could help the AI powerhouse reach a more secure financial position, allowing OpenAI to continue its research, development and advancements with the freedom to iterate and experiment before bringing products to market, according to Rowan Curran, analyst at Forrester.
Microsoft, on the other hand, can capitalize on the enthusiasm surrounding ChatGPT and OpenAI’s models.
“While Microsoft will obviously want a substantial commercial return on this partnership, they could get an even more significant short-term return in mindshare,” Curran said in an email. “The excitement around ChatGPT has already made it nearly synonymous with AI in many peoples’ minds, and Microsoft could capitalize off of that with increased demand for Azure’s OpenAI APIs and their broader AI/ML platform.”
The partnership enables Microsoft to expand AI capabilities across its suite of products, strengthening its position in the market amid economic downturn and layoffs affecting the tech sector. Tech giants Google and Microsoft announced workforce reductions last week, impacting 12,000 and 10,000 of their respective global workforces.
The Microsoft-OpenAI partnership and its hype has shown the public’s appetite to engage with AI-powered models, making investments in AI even more appealing for enterprises.
“What has happened is these companies have been investing in these technologies for a long time, but suddenly ChatGPT captured everybody’s imagination, so the feeling is it has accelerated how consumers will be willing to adopt these types of technologies,” Rajesh Kandaswamy, distinguished VP analyst at Gartner, said. “Now, for these large companies, there is a big FOMO.”
The fear of missing out was seen in recent announcements from companies wanting to show their commitment to advancing AI capabilities. Last week Google’s CEO Sundar Pichai said the company pivoted to be AI-first “years ago” and has a “substantial opportunity” with AI across its products.
“They all want to be in the game, and they don’t want to miss out,” Kandaswamy said. “These really large companies are now using their money and distribution to buy some of the most innovative companies and consolidate power.”
