This is one long article. Msft

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05-16

This is one long article.

Msft is just so clunky. In everything they do. They've just lost me as a customer with this clunky ux. It's amazing so many people put up with their garbage system.

Microsoft’s CEO on How AI Will Remake Every Company, Including His

Satya Nadella arrived at the World Economic Forum in January ready to talk up his triumphs in artificial intelligence, when a dangerous threat emerged. A little-known Chinese startup named DeepSeek had just released an AI model that quickly became the talk of Davos, Switzerland. Nadella, the chief executive officer of Microsoft Corp., gathered his lieutenants to assess the out-of-nowhere competition. They set up a virtual war room on—where else?

Microsoft’s CEO on How AI Will Remake Every Company, Including His

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They've just lost me as a customer with this clunky ux. It's amazing so many people put up with their garbage system.&nbsp;</p></body></html>","text":"This is one long article. Msft is just so clunky. In everything they do. They've just lost me as a customer with this clunky ux. It's amazing so many people put up with their garbage system.","highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/435755594739936","repostId":1184464718,"repostType":2,"repost":{"id":"1184464718","kind":"news","pubTimestamp":1747367802,"share":"https://ttm.financial/m/news/1184464718?lang=en_US&edition=fundamental","pubTime":"2025-05-16 11:56","market":"us","language":"en","title":"Microsoft’s CEO on How AI Will Remake Every Company, Including His","url":"https://stock-news.laohu8.com/highlight/detail?id=1184464718","media":"Bloomberg","summary":"Satya Nadella arrived at the World Economic Forum in January ready to talk up his triumphs in artificial intelligence, when a dangerous threat emerged. A little-known Chinese startup named DeepSeek had just released an AI model that quickly became the talk of Davos, Switzerland. Nadella, the chief executive officer of Microsoft Corp., gathered his lieutenants to assess the out-of-nowhere competition. They set up a virtual war room on—where else?","content":"<div>\n<p>Satya Nadella arrived at the World Economic Forum in January ready to talk up his triumphs in artificial intelligence, when a dangerous threat emerged. A little-known Chinese startup named DeepSeek ...</p>\n\n<a href=\"https://www.bloomberg.com/news/features/2025-05-15/microsoft-ceo-satya-nadella-on-his-ai-efforts-and-openai-partnership?srnd=homepage-americas\">Source Link</a>\n\n</div>\n","source":"lsy1584095487587","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Microsoft’s CEO on How AI Will Remake Every Company, Including His</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMicrosoft’s CEO on How AI Will Remake Every Company, Including His\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-05-16 11:56 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.bloomberg.com/news/features/2025-05-15/microsoft-ceo-satya-nadella-on-his-ai-efforts-and-openai-partnership?srnd=homepage-americas><strong>Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Satya Nadella arrived at the World Economic Forum in January ready to talk up his triumphs in artificial intelligence, when a dangerous threat emerged. A little-known Chinese startup named DeepSeek ...</p>\n\n<a href=\"https://www.bloomberg.com/news/features/2025-05-15/microsoft-ceo-satya-nadella-on-his-ai-efforts-and-openai-partnership?srnd=homepage-americas\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MSFT":"微软"},"source_url":"https://www.bloomberg.com/news/features/2025-05-15/microsoft-ceo-satya-nadella-on-his-ai-efforts-and-openai-partnership?srnd=homepage-americas","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1184464718","content_text":"Satya Nadella arrived at the World Economic Forum in January ready to talk up his triumphs in artificial intelligence, when a dangerous threat emerged. A little-known Chinese startup named DeepSeek had just released an AI model that quickly became the talk of Davos, Switzerland. Nadella, the chief executive officer of Microsoft Corp., gathered his lieutenants to assess the out-of-nowhere competition. They set up a virtual war room on—where else?—Microsoft Teams to coordinate a response.The new model, DeepSeek-R1, could deliver results roughly on par with those of OpenAI at a fraction of the price. Computer processing that would cost $1,000 through OpenAI ran for just $36 through R1. Even crazier, DeepSeek made R1 open-source, meaning anyone could install versions of it for free if they had a powerful enough computer. “OpenAI has been so far ahead that no one’s really come close,” Nadella tells Bloomberg Businessweek. “DeepSeek, and R1 in particular, was the first model I’ve seen post some points.”To the schmoozers in Davos, this seemed like a huge problem for Microsoft. The company had invested $13.75 billion in OpenAI by that point and had already committed to spend $80 billion on AI data centers in this fiscal year alone, all under an assumption that better AI required more computing resources. Nadella immediately ordered his team to conduct a security review of DeepSeek-R1. They scrutinized a research paper DeepSeek published detailing its work and contacted the startup’s engineers, peppering them with questions about the model. (Few others have even been able to get the opaque Chinese company to respond to emails.)Soon roughly 100 Microsoft employees were coming in and out of the Teams videoconference rooms testing the security of DeepSeek’s codebase and exchanging notes. “People didn’t sleep,” says Asha Sharma, the company’s AI platform head, who spearheaded the effort. “It was 48 hours of going through every single thing.” R1 appeared to be legit. But instead of trying to stomp out this new rival, Nadella chose to embrace it. He instructed his team to install R1 on Microsoft’s cloud and sell access to it to customers alongside products from OpenAI and Microsoft itself. “Get it out,” Nadella recalls telling his staff.Nadella’s primary allegiance now isn’t to OpenAI’s very expensive skunkworks. His ultimate objective is to sell whatever AI his customers might want through Microsoft’s platforms. Nadella had spent three years running various parts of the company’s cloud business, called Azure, before he became CEO in 2014, and that’s now central to his AI strategy. Customers can choose from over 1,900 different models on Azure, including ones made by Meta and OpenAI, and upstarts such as Cohere, Mistral, Stability AI and now DeepSeek. (Some, though, such as Google’s Gemini, aren’t available to Microsoft for competitive reasons.) Whether a model’s usage costs a customer $10 through OpenAI or 90¢ via DeepSeek, Microsoft gets paid for the cloud computing, cybersecurity protections, data storage and other upsold services.The DeepSeek episode highlights another, arguably more revealing part of Nadella’s thinking: AI is rapidly commoditizing, and this is a good thing for Microsoft. While everyone in Davos was focused on AI consumption, Nadella was contemplating the history of coal production. One of his favorite economic theories is the Jevons paradox, which posits that as a resource becomes more accessible and its usage more efficient, consumption increases. This happened with coal during the 18th and 19th centuries and more recently with plane travel, when plummeting operational costs and airfares helped create frequent flyers, new flight destinations and booming sales for airlines. Nadella believes a similar phenomenon will play out with AI.This econ mindset has been driving the company toward creating its own AI architectures, including some tiny models with capabilities similar to those of DeepSeek-R1. Over the past year, it’s also been training a series of large language models called MAI-2, the latest iteration of Microsoft’s in-house alternatives to OpenAI’s models, which it had been developing in secret. The goal is to build AI that requires less computing power than ChatGPT and bring down the cost to operate Microsoft’s equivalent service, Copilot. The company will still regularly tap OpenAI’s bleeding-edge technology, but Nadella is convinced Microsoft can deliver near-ChatGPT quality for a lot less.What this all means for Microsoft’s arrangement with OpenAI is complicated. Six years on, what began as a nurturing kinship has turned into an intense sibling rivalry. A power struggle within OpenAI in 2023 was a turning point in the relationship between the companies, and in various ways Microsoft is asserting its dominance. The MAI-2 project, for example, offers protection for Microsoft, to avoid being “left exposed” in case anything “catastrophic” happens to OpenAI, says Mustafa Suleyman, the head of Microsoft’s consumer Copilot efforts. “The relationship with OpenAI has to date been pretty amazing,” he says. “But this is a 50-year-old company that needs to be in an amazing place in 2030, 2035 and 2040.”OpenAI CEO Sam Altman has repeatedly signaled that his company’s mission is to create an artificial general intelligence, a final frontier for the current AI era. With MAI-2, Nadella is instead pursuing maximum cost efficiency, even though it won’t be as intelligent as OpenAI’s most advanced models. He already feels a sense of ownership over OpenAI’s intellectual property. “MAI is not a clone,” he says. “When I have a contract [with OpenAI] that says, ‘Oh, I’m essentially funding it and have IP rights,’ it would be stupid to sort of do it twice. So we avoided that stupidity.”If Nadella sounds defensive, that’s because he’s facing a concentrated version of the trial practically every CEO is undergoing now. Even with Microsoft’s considerable resources, Nadella must decide how AI will reshape his business by making a set of extremely difficult trade-offs—between embracing new-fangled technology and shielding his employees and business partners from disruptive systems, and between marching in line with what’s worked in the past and blindly leaping into the future. Up to this point, shareholders have lauded Nadella’s performance, making Microsoft the most valuable company on Earth. If he falls flat, though, his may be one of the first jobs threatened by AI.The alliance between Microsoft and OpenAI—and between Nadella and Altman—was the foundation of the present AI boom. To realize their ambitions, Altman’s brainy engineers needed Nadella’s money and data centers. Nadella’s $1 billion investment in OpenAI in mid-2019 was prescient, giving Microsoft early and exclusive access to the research lab’s technology. Two years later, Microsoft rolled out GitHub Copilot, a coding assistant that quickly became a must-have for programmers.In 2022, OpenAI held demonstrations for senior Microsoft executives of a groundbreaking new model. Over the next several months, groups inside Microsoft tinkered with other ways they might adapt OpenAI’s technology to the daily needs of the modern office worker. One promising prototype called “intelligent recap” would summarize conference calls in Teams. Before Microsoft could release any of it, though, OpenAI built a deceptively simple chat interface around its language engine, and people went nuts. After the release of ChatGPT in November 2022, Microsoft found itself in a position similar to that of every other tech company: playing catch-up. It was especially bruising for Microsoft—almost as if the company had been holding the components for the original iPhone and didn’t know what to do with them.Nadella took a firmer hand directing the AI projects and setting aggressive deadlines. Within a month or so of ChatGPT’s debut, a software team held a demonstration for Nadella showing some OpenAI-powered functions built into Office programs. The idea was for users to select an option in Outlook to have AI compose an email reply or hit a button in Word to convert an outline into a rough draft. “Satya said, ‘Look, I just feel like we’re missing something,’” recalls Jared Spataro, who oversees marketing for Microsoft’s workplace apps. “‘This feels like just a set of features.’”Instead of burying these new tools in different menus, Nadella pushed the teams to bundle all the OpenAI enhancements into a single assistant—later branded Copilot—pinned to the side of Microsoft’s apps. Some later grumbled that the vision wasn’t totally clear. Due in part to a lack of coordination between teams and a reticence to mess too much with what a former Copilot product manager calls the “crown jewels” (Windows, Word, Excel), the resulting AI assistants were inconsistent. The PowerPoint Copilot behaved much differently than the GitHub or Teams Copilot. “It felt like there were 13 different Copilots,” says a former Microsoft design leader who, like some other ex-employees interviewed by Businessweek, asked not to be identified to avoid career repercussions.In March 2023, the company unveiled its business-oriented Copilot for Office programs, which are part of its Microsoft 365 subscription. By that point, ChatGPT boasted more than 100 million active users and was selling a $20-a-month subscription for its most advanced AI. To get early access to Copilot, businesses were soon asked to purchase a minimum of 300 licenses at $30 a month each on top of their existing Microsoft 365 plans. Many customers who tried this Copilot found it an inferior product, and an alarming pattern emerged: Users often preferred to go to ChatGPT for questions and paste its responses into Word. (A notable exception: People loved the intelligent recap feature in Teams when it arrived in May 2023. ChatGPT didn’t have that skill yet.)Part of what slowed down Microsoft was its preoccupation with software security. Compliance, data protections and legal reviews left its technology lagging but eventually proved to be an excellent selling point to corporations. “It’s been great for us to go to customers and say, ‘Hey, you like ChatGPT? This is that, but better: more powerful user experience, better security,’” says Jeff Teper, who runs Teams.Yet it was clear something else was holding the company back from taking bigger risks with its products. The former Copilot manager describes it as a kind of post-traumatic stress disorder from embarrassments that stretch as far back as the proto chatbot Clippy, the animated paper clip that became an enduring punch line. ChatGPT could perform way more actions with fewer bureaucratic limitations, and Microsoft’s engineers knew it, this person says. He estimates that, of the hundreds of people in his organization, three-quarters of them paid out of their own pocket for ChatGPT, because Microsoft wouldn’t let them expense it. (Teper says it’s common for employees to test other companies’ services to better understand the market.)Microsoft’s customers were gravitating to ChatGPT too. Moderna Inc. found OpenAI’s options to customize ChatGPT made it far more versatile than Copilot, says Brad Miller, the biotech company’s former chief information officer. “Microsoft was like, ‘It’s embedded in Office, just use it in Office.’ And we were like, ‘There’s so much more that we want to do,’” he says.That fall, as Microsoft was readying Copilot for a general release, more than 18,000 businesses were accessing OpenAI models through Azure, whereas Copilot’s corporate subscribers numbered in the hundreds. Microsoft still made oodles of money from renting access to OpenAI’s models and a revenue-share agreement on ChatGPT subscriptions but generally not as much as it would have if clients paid for Copilot instead.Nadella tried to build momentum for Microsoft’s AI services at the company’s annual developer conference in November 2023, showcasing a tool to create custom Copilots similar to what businesses were already doing with ChatGPT. The effort was overshadowed by news on the last day of the event that OpenAI’s board had ousted Altman as CEO. Nadella, despite having increased his financial commitment to OpenAI by $10 billion earlier that year, only learned of Altman’s firing after it transpired.Microsoft management now refers to the infamous four-day period—when Altman lost his job, accepted an executive role at Microsoft and then wrested back control of OpenAI from his board—using an array of euphemisms: “that particular incident” or “the November OpenAI sort of situation.” In truth, that particular incident irrevocably damaged the partnership between the companies. Just before, Nadella had been considering another massive cash infusion—in the tens of billions of dollars—to keep OpenAI hurtling forward ahead of Amazon.com and Google, according to a person with direct knowledge of the deliberations. No more. Nadella figured Microsoft had risked enough on the immaturely run startup.Nadella had been bonding with Suleyman, an influential figure in the AI world who’d co-founded the lab that became Google DeepMind and was at the time overseeing a startup called Inflection AI Inc. Inflection had a chatbot geared more for EQ than IQ, positioning the product as a sort of extremely knowledgeable friend. Inflection’s chatbot never reached anywhere near the prominence of ChatGPT, but Nadella loved its crisp, playful responses. It was Nadella’s turn to surprise OpenAI: In March 2024, Microsoft spent $650 million to license Inflection’s software and hire most of its team. Microsoft informed OpenAI a day before the deal was announced.Nadella put Suleyman, a 40-year-old Briton, in charge of Microsoft’s consumer AI, a portfolio that includes Bing, the Copilot app, the Edge web browser and MSN web portal. The slate was in weak shape, especially among young people, who aren’t exactly in MSN.com’s core demographic. Generation Z is growing up with iPhones and MacBooks, Gmail and Google Docs, Instagram and TikTok and now ChatGPT. “The way that Satya put it to me is that we’re going through this generational shift where younger people today, who are going to become the CEOs and industry leaders in a decade’s time and make purchasing decisions in the enterprise, will have not really experienced Microsoft,” Suleyman says. “That’s a big structural challenge.”Working out of offices in London and Mountain View, California, Suleyman’s employees set about creating a version of Copilot designed for life away from the office. As they’d done at Inflection, they taught this Copilot empathy, humor and kindness. Do people want an emotional connection with the company that makes Excel? Suleyman thinks so. Or at least he believes it’ll be harder to switch to a competitor if the user sees Copilot as a friend or therapist.But Suleyman grappled with a bigger challenge. His work essentially consisted of modifying OpenAI technology, and he says Microsoft wasn’t getting access to the startup’s new models as early as it was entitled to. OpenAI would roll out a model to ChatGPT customers with a splash before he had enough time to integrate it into Microsoft’s software. Suleyman, who has a reputation for having a hot temper despite his EQ values, could be indelicate on conference calls. Tensions escalated as he pushed OpenAI to share more and earlier access to its models.Brad Lightcap, OpenAI’s chief operating officer, says that technology transfer is an “incredibly complex operational challenge” and that OpenAI is one of Microsoft’s biggest Azure customers and expects to remain a large client after their current agreement expires in 2030. Suleyman says he’s not surprised the fast-growing startup occasionally forgets some of its obligations to Microsoft. “I’m quite empathetic for them,” he says.Empathy is a big theme for Suleyman. For a demonstration of what he’s been working on in Copilot, he taps the voice agent on his iPhone app and tells it he’s in a difficult life state and struggling with anxieties. A soothing male voice with a British accent responds, “Tough situations can fog up clear thinking,” and gently asks if he can share more about what’s stirring up his emotions. Copilot is programmed to sense a user’s comfort boundaries and carefully diagnose issues before suggesting solutions, Suleyman says. “Did you hear the pauses? Did you hear the volume go down?” he asks with pride. “That’s extremely hard to do.”On a frigid February morning at Microsoft’s headquarters in Redmond, Washington, more than a dozen managers from Estée Lauder Cos. are receiving a crash course in Copilot. The cosmetics company has been exploring ways for Microsoft’s AI to assist in a corporate restructuring intended to improve management of ingredients, product lines and supplies. Although Estée Lauder is a longtime Copilot customer with 15,000 licenses, employees are only just learning about some of the ways it can be used. When a few of them express interest in a tool to automatically manage the minutiae around hiring, a Microsoft sales rep informs them they’ve had access to that Copilot feature for a while.For Microsoft, these moments—when a customer realizes Copilot can do something genuinely useful for them—are essential. Roberto Canevari, Estée Lauder’s executive vice president who oversees its global supply chain, says he experienced his own just weeks earlier. After spending an entire weekend studying and annotating a 30-page operations report, he asked Copilot on a lark for its summary. The resulting one-pager was almost as good as the one he wrote. “It made me feel very old and not very smart,” he says jokingly.While Suleyman worked on a more empathic Copilot for consumers, his cohorts in the enterprise group spent the past year focused on automating routine and monotonous workflows, such as reconciling bank invoices or reviewing warehouse inventory. Microsoft found that office workers were most impressed when Copilot could do the really boring parts of their job for them. Instead of talking in the abstract about AI’s world-changing potential, Microsoft sales reps now pitch Copilot’s ability to add a slide about budget variances to a PowerPoint.The approach is resonating. In a quarterly financial disclosure in January, Microsoft said it’s on track to generate more than $13 billion a year in AI revenue. It earns money from Copilot subscriptions, usage fees from AI models running on Azure and a revenue-share with OpenAI on ChatGPT memberships. GitHub Copilot surpassed 15 million users as of March, and the corporate version of Copilot now boasts hundreds of thousands of businesses as customers, with their engagement tripling over the past year.Nestlé SA has found Copilot wildly useful for comparing contracts and for language translations for customer service teams, says Christopher Wright, CIO at the Swiss food conglomerate. Nestlé pays for more than 25,000 Microsoft 365 licenses with Copilot, and Wright estimates that 10 minutes of time savings per day covers the cost of each employee’s subscription. The company is also starting to pay extra to use a product called Copilot Studio to craft custom AI agents with subject-matter expertise. Wright describes it as shockingly cheap for what the company gets out of it. “Don’t tell Microsoft that, please,” he says.A lot of these AI capabilities still depend on models from OpenAI, a fact Microsoft is less keen to advertise lately. Copilot will automatically deliver results using whatever Microsoft or OpenAI model is best for a particular prompt, rather than ask customers to choose. Meanwhile, ChatGPT gives users the ability to select from a jumbled list that includes 4o, 4.5, o3, o4-mini and o4-mini-high—designations that are probably more meaningful to robots than to people. Spataro, the Microsoft marketing leader, scoffs at the design choice. “Man, the interface is getting very loaded,” he says. (Altman has said OpenAI is working on simplifying its offerings.)You’ve got questions about AI. We’ve got answers. Sign up for Bloomberg Technology’s weekly Q&AI newsletter by Shirin Ghaffary.Judson Althoff, Microsoft’s sales chief, says few car buyers care what engine is under the hood so long as the vehicle can get them from Point A to B. “Is it a four-cylinder turbo? An eight-cylinder?” he asks. “How much the whole package costs is what they care about.” If ChatGPT is a top-of-the-line Range Rover, MAI-2 will be like a Prius: Not as fast or powerful, but much more efficient for your daily commute. And Microsoft has been training even smaller and more efficient models that specialize in math or speech recognition, part of a portfolio called Phi. These AI efforts could someday allow you to summarize a lengthy document or process voice commands using Copilot on a standard laptop without an internet connection.The key to getting there, according to Suleyman, can be found in a mathematical concept called the Pareto frontier. (The Wikipedia article helpfully describes it as “the set of all Pareto efficient solutions.”) Based on an efficiency theory developed by a 19th century Italian economist, the term refers to the sweet spot between a set of desirable attributes. It’s thrown around in meetings by software engineers seeking to find an equilibrium between how fast and high-quality an AI model is versus what it costs to operate. Google CEO Sundar Pichai boasted on a recent earnings call about its own advances in the Pareto frontier, so the company can deliver more AI features on Android phones, its search engine and YouTube without breaking the bank. Apple Inc., too, has cited Pareto, in its research around building language models that can run on an iPhone.Nadella offers various reasons for Microsoft to strengthen its in-house AI units after spending billions on OpenAI. Partly it’s about “exercising in the gym,” he says, to bulk up the company’s AI model-training muscle so it’s not entirely dependent on OpenAI. He says he won’t necessarily favor one lab’s technology over the other’s. Sometimes the priority will be Suleyman’s cheaper models, sometimes Altman’s more proficient ones.The rush to embrace DeepSeek in January wasn’t a one-off either. Microsoft added another DeepSeek model to its cloud catalog in March, renting it for half the price of an equivalent from OpenAI. Someday, Copilot could run certain queries through DeepSeek or another model available in Microsoft’s cloud—something the consumer and enterprise teams have been testing. These moves are not so much about hedging Nadella’s bet on OpenAI; it’s almost like he’s tossing chips every which way on the roulette table.Of course, Nadella isn’t always winning. On the day in January when DeepSeek first dethroned ChatGPT atop the Apple App Store in the US, Copilot wasn’t anywhere in the top 200, according to research firm Sensor Tower. (Although DeepSeek’s open-source models are available on Azure, the startup runs its own mobile chatbot app, delivering no benefit to Microsoft.) Other latecomers, such as Google’s Gemini and Elon Musk’s Grok, are also consistently ahead.Nadella points out that Microsoft was once less relevant in videoconferencing too. “Everybody would say, ‘Hey, Zoom, Zoom, Zoom,’” Nadella says. “We won that in the enterprise.” (A Zoom spokesperson declined to comment.)In AI, the company’s products are scattered, and not in a good way, says Ethan Mollick, a professor at the Wharton School of the University of Pennsylvania who studies generative AI and wrote the book Co-Intelligence: Living and Working With AI. But Microsoft has an edge on every other company out there. “Their advantage is they own the workplace,” he says. “Corporate America runs on Microsoft.” Competitors have accused Microsoft of using anticompetitive tactics in regard to its alliance with OpenAI. Donald Trump’s Federal Trade Commission is pursuing a broad antitrust probe of the company that was opened by the Biden administration. Microsoft has said it’s cooperating with the agency.Many incentives inside Microsoft are aligned to push Copilot. On May 19, the company will hold its biggest annual developer conference where Copilot is expected to be the star of the show. Already, the company boasts that about 70% of Fortune 500 companies use it and that BlackRock, PricewaterhouseCoopers and many others have signed massive contracts for the AI license.Armin Woworsky, an engineer overseeing AI solutions for Austria’s Raiffeisen Bank International AG, says Microsoft’s sales team is constantly pitching his staff to “use Copilot, use Copilot, use Copilot.” Woworsky says the bank’s employees do love to use Copilot in Teams for meeting summaries, but way more of them—over 25,000—rely on a customized corporate version of ChatGPT. RBI built it using Microsoft’s cloud tools for compliance reasons. “Maybe they don’t deliver everything from the very beginning or sometimes, for me, they are too slow,” Woworsky says. “But in the end, Microsoft completely understands how to bring certain technologies into our environment.”Copilot consumes Nadella’s life outside the office as well. He likes podcasts, but instead of listening to them, he loads transcripts into the Copilot app on his iPhone so he can chat with the voice assistant about the content of an episode in the car on his commute to Redmond. At the office, he relies on Copilot to deliver summaries of messages he receives in Outlook and Teams and toggles among at least 10 custom agents from Copilot Studio. He views them as his AI chiefs of staff, delegating meeting prep, research and other tasks to the bots. “I’m an email typist,” Nadella jokes of his job, noting that Copilot is thankfully very good at triaging his messages.Nadella, who grew up in Hyderabad, India, the son of a Marxist economist, was 7 when Bill Gates and Paul Allen started Microsoft in 1975. He’s spent more than half his life at the company. During Nadella’s tenure, he’s seen the emergence of the World Wide Web, the creation of Internet Explorer, the dot-com crash, the US government’s landmark antitrust lawsuit against Microsoft and the disastrous losses that followed, to Google in search and Apple in phones. AI could top them all. At an event in April to celebrate the company’s 50th anniversary, Gates quipped that Copilot would eventually take over as CEO.For now, Nadella is still trying to earn his keep. He’s sought to rally the troops by telling them to forget about the successes of the past and be ready to abandon what’s worked up to now, says Charles Lamanna, a vice president who oversees Copilot Studio and some other products. “The last five years we spent building, it doesn’t matter. It’s not worth anything anymore,” he recalls Nadella telling them. “Burn the ships.” (One ship recently set ablaze: In May Nadella shut down Skype, which Microsoft once spent $8.5 billion to acquire, only to later replace it with Teams.)With AI promising (or threatening) such existential change, there remain weighty questions about who will win and who will lose from this next technological transformation. In public, Nadella often sounds like a macroeconomist. He draws parallels between this moment in AI and the industrial revolution, and the convergence of the Global North and South, and cites economic and labor theorists from David Autor to Friedrich Hayek to Herbert Simon.In particular, the Jevons paradox—first described in an 1865 book on British coal production by William Stanley Jevons—has greatly informed Nadella’s understanding of Microsoft’s place in the AI revolution. Jevons found that the invention of a more fuel-efficient steam engine made coal a more desirable fuel source, igniting a surge in coal consumption. That’s why Nadella appears unfazed by the perception of DeepSeek undermining the value of his investment in OpenAI or the buildout of Microsoft data centers. More efficient AI will eventually mean a greater need for AI services and infrastructure to power them, in his view.That’s not to suggest there won’t be a reckoning for excessive spending on AI model training and Nvidia Corp.’s graphics processing units (GPUs). OpenAI is working with Oracle Corp. and SoftBank Group Corp. on a massive data center endeavor called the Stargate Project, promising to spend a whopping $500 billion over the next four years. Nadella chose not to be part of the financing given the tens of billions he’s already investing annually in Microsoft’s own AI infrastructure. (“I wouldn’t hold it against anyone, certainly not a CEO of a public company, to realize when there are limits of what their company can bear,” says Lightcap, the OpenAI COO.) At the same time, Microsoft is pulling back on some of its own data center projects around the world. These moves are an acknowledgement that it doesn’t make sense to keep piling money into “what is effectively a real estate asset,” says Lila Tretikov, a former deputy chief technology officer at Microsoft.On the other hand, the reckoning could be far more consequential for the broader society. Microsoft has been very careful with how it talks about AI, says a person with direct knowledge of its AI marketing who asked not to be identified: Copilot is supposed to help accomplish tasks, not automate jobs. Interviews with Microsoft customers and salespeople find that the latter is already occurring. They describe contractors, outsourced programmers, interns and summer analysts all losing work to AI.In his book The Coming Wave, published before he joined Microsoft, Suleyman laid out the risks more bluntly. “These tools will only temporarily augment human intelligence. They will make us smarter and more efficient for a time, and will unlock enormous amounts of economic growth, but they are fundamentally labor replacing,” he wrote. Suleyman advocated for regulatory oversight and other government interventions such as new taxes on autonomous systems and a universal basic income to prevent a socioeconomic collapse.Nadella is more optimistic than his new deputy. In an interview at Microsoft headquarters in conference room #34-3563, sitting next to his human chief of staff, Nadella makes the case that his Copilot assistants won’t replace her. As she stoically types notes of our conversation on her tablet, he acknowledges that AI will cause “hard displacement and changes in labor pools,” including for Microsoft. (Althoff, the sales chief, says Nadella is pressuring his team to find ways to use AI to increase revenue from its operation instead of boosting head count. Meanwhile, Microsoft said on May 13 that it’s cutting 6,000 employees, about 3% of its workforce.) But Nadella contends that AI could end up delivering more societal benefits than the industrial revolution did. “When you create abundance,” he says, “then the question is what one does with that abundance to create more surplus.”He argues, again, that it comes down to economics. If Microsoft spends hundreds of billions of dollars on AI projects, he estimates that will likely generate trillions of dollars in economic activity—more data centers mean more construction, energy use, manufacturing equipment and so forth. More AI use means more opportunities to create new kinds of businesses, especially as AI bridges the skills gap between an entry-level employee, expert engineer and executive. “There may be a new startup with a hundred founders,” Nadella says. Or, if the AI ever gets good enough, perhaps 100 startups with just one founder.It will take time for the jobs of the AI era to arrive, he says. And then the huge economic and productivity boosts will follow. Just as they did after the advent of the steam engine, electricity, the computer and the internet. “When that happens, then everything computes at a societal level,” Nadella says. “Otherwise, all you have is a bunch of GPUs.”","news_type":1,"symbols_score_info":{"MSFT":1.1}},"isVote":1,"tweetType":1,"viewCount":173,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":155,"optionInvolvedFlag":false,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}