Microsoft, the tech giant known for its Windows operating system, is making a massive $10 billion investment in artificial intelligence (AI) abroad, according to experts. This move is seen as essential for Microsoft to remain competitive in the rapidly advancing field of AI. The success of OpenAI’s ChatGPT, an AI-powered language model, has thrust generative AI into the spotlight, and Microsoft, as the primary funder of OpenAI, is determined to stay at the forefront of this technology.
Microsoft’s investment comes at a time when companies like Google, Meta, and Amazon are also heavily investing in AI. These tech giants are racing to develop tools that can generate text, images, and even lines of code with simple language prompts. “These billions of dollars are the necessary stakes to be part of the elite,” says Jeremy Goldman, an analyst at Emarketer. These companies are vying for a seat in the AI oligopoly, and they are willing to spend their substantial war chests on AI to ensure they don’t fall behind. The value of AI has become so significant that losing in this race is not an option.
Generative AI, often hailed as the next industrial revolution, holds great promise and raises concerns at the same time. In the immediate future, it offers immense potential for cloud giants like Amazon, Microsoft, and Google to enhance productivity for their enterprise customers. Microsoft is projected to generate an additional $25 to $30 billion per year by 2025 from this segment alone, according to Dan Ives, an expert at Wedbush Securities. This investment in AI is a turning point for Microsoft, similar to how the iPhone transformed Apple, as the adoption of generative AI and Microsoft’s AI assistant, Copilot, is expected to accelerate. Microsoft’s cloud service, Azure, will also secure more contracts as a result.
Apart from its partnership with OpenAI, Microsoft is also forging contracts with other companies in the AI space. The French AI startup Mistral is set to receive a €15 million investment from Microsoft, while the tech giant will invest $1.5 billion in G42, an AI company in the United Arab Emirates, and also acquire a seat on its board of directors. These strategic moves align with US interests as G42 has committed to favoring American technology by severing its ties with Chinese partnerships, according to reports from The New York Times and Bloomberg.
It’s worth noting that Microsoft takes a slightly different approach to AI compared to its competitors. While Google relies mostly on its internal teams, Microsoft collaborates with external partners. “At first, we thought the AI wars would be fought by a few players seeking general AI capabilities that can do everything. Now the market is starting to recognize that different models are needed for different purposes,” explains Jeremy Goldman. Cloud companies are now emphasizing the variety of AI offerings they provide. Recently, Microsoft introduced Phi-3 Mini, the first in a new series of small-scale models designed for simple tasks that can be executed on a smartphone, for example.
Microsoft’s strategy in the AI space is to take calculated risks. They invest in various approaches, and some are more likely to pay off than others. With its $10 billion investment in AI and its ongoing partnerships, Microsoft is setting the stage for global domination in this critical market. As the AI race continues to accelerate, securing a position among the AI elite has become a top priority, and Microsoft is determined to stay ahead of the curve.
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