Speaker 1: Microsoft, Word, power Point, Excel. They are fixtures of office
Speaker 1: life everywhere, but it's almost thirty years since Microsoft released
Speaker 1: the iconic Office ninety five. In the space of just
Speaker 1: a few months, though, the company that once gave us
Speaker 1: the likes of Clippy the interactive paper clip, has suddenly
Speaker 1: become one of the most important players in the rapid
Speaker 1: rise of artificial intelligence, and it all has to do
Speaker 1: with its collaboration with open AI, the creator of the
Speaker 1: wildly popular chat GPT that seems to be taking over
Speaker 1: the world and that some people fear actually will take
Speaker 1: over the world.
Speaker 2: If you went back a couple of years and you
Speaker 2: asked people at Silicon Valley, like, who's in the lead
Speaker 2: in AI, they would have said Google. And I think
Speaker 2: everyone agrees now that Microsoft is either kind of like
Speaker 2: in the lead or has at least gotten to parody
Speaker 2: with Google.
Speaker 1: I'm West Kasova today on the Big Take. Bloomberg BusinessWeek
Speaker 1: writer Max Chafkin is here with the unlikely story of
Speaker 1: how Microsoft, of all companies, is making itself cool again. Max,
Speaker 1: We've obviously been talking a lot lately about open AI
Speaker 1: and chat gpt, all the different versions of AI. But
Speaker 1: how does Microsoft enter into this because they are really
Speaker 1: a central player in this whole story.
Speaker 2: Yeah. Absolutely, when you think about these kind of crazy
Speaker 2: developments of the last i don't know, eight nine months,
Speaker 2: the release of chat gpt and then this kind of
Speaker 2: frenzy of activity related ai. You know, one player, as
Speaker 2: you said, one of the key players is open ai,
Speaker 2: which is the startup that created chat gpt. But basically
Speaker 2: an equally big player is Microsoft, which is the biggest
Speaker 2: investor in open Ai. But that even kind of understates
Speaker 2: how important Microsoft is to this startup. Microsoft is the
Speaker 2: largest shareholder, It owns something like forty nine percent of
Speaker 2: the company. It is the sole provider of computing services.
Speaker 2: It runs all the computers that open ai uses. It's
Speaker 2: also the main commercial partner. It's the way that open
Speaker 2: ai gets revenue. And you know, as we wrote in
Speaker 2: the story, I think it's probably useful to think about
Speaker 2: open Ai not so much as a startup, but as
Speaker 2: a very successful, you know, quasi independent subsidiary of the
Speaker 2: largest business software company in the world, the second largest
Speaker 2: company in the world by marketcap.
Speaker 1: And how that partnership came to be as the subject
Speaker 1: of this big story you've written, and it's really interesting
Speaker 1: because Microsoft is huge, we all use their products, but
Speaker 1: I don't think people have thought about Microsoft as a
Speaker 1: cutting edge, innovative company for a really long time.
Speaker 2: When my co writer Dina Bass and I were in
Speaker 2: Redmond in Washington near Seattle, on the Microsoft campus, you know,
Speaker 2: they were talking about how amazing it was, and they
Speaker 2: were saying, you know, it's like Windows ninety five all
Speaker 2: over again, at which I loved because, first of all,
Speaker 2: to most people outside of Redmen that is like an insult,
Speaker 2: but if you're there, it's the highest compliment because that
Speaker 2: is really the time when Microsoft was on top of
Speaker 2: the world. And since then, you know, they went through
Speaker 2: a very sort of dark period in the sort of
Speaker 2: two thousands. Ever since Sati Nadella became CEO of Microsoft,
Speaker 2: they've been on this kind of turnaround trajectory. And some
Speaker 2: of that has had to do with business decisions that
Speaker 2: he's made, you know, having to do with basically playing
Speaker 2: nicer with other platforms like Apple, but a big part
Speaker 2: of it is this AI thing and especially the deal
Speaker 2: with open Ai. And really this all started at Sun Valley,
Speaker 2: which is this annual conference organized by Allen and Company.
Speaker 2: It's an investment bank it's in Idaho, and it's essentially
Speaker 2: billionaire summer camp. Billionaires go there to hang out out
Speaker 2: and make deals. It's the one place you see all
Speaker 2: these guys like looking sort of relaxed. If you see
Speaker 2: a picture of a CEO wearing a lanyard, it's almost
Speaker 2: definitely a Sun Valley picture, you know. And Altman, Sam Altman,
Speaker 2: the co founder of open Ai. You know, he's a
Speaker 2: guy who goes to Sun Valley. He is a young guy.
Speaker 2: He's only about forty, but he's sort of been in
Speaker 2: Silicon Valley for a really long time. He started a
Speaker 2: company called Looped, which was like a mobile startup. He
Speaker 2: ran y combinator, you know, big deal kind of investment firm.
Speaker 2: He's sort of everywhere. He's friends with everybody. And at
Speaker 2: Sun Valley, he and Nadella run into each other and
Speaker 2: they get to talking. And as we write in the story,
Speaker 2: you know, a couple of things became clear in this conversation,
Speaker 2: which then continued and culminated in a deal in twenty nineteen,
Speaker 2: one of which is that Sam Altman has sort of
Speaker 2: these really big ideas, sort of famously big. He thinks
Speaker 2: that AI could potentially end the world he thinks that
Speaker 2: he is creating artificial superintelligence that's potentially you know, lead
Speaker 2: us to a life life of leisure where there are
Speaker 2: no jobs, or there are very few jobs, which could
Speaker 2: have huge societal consequences. But the thing I think that
Speaker 2: appealed to Microsoft is that open ai was actually making
Speaker 2: progress towards commercial products. Microsoft had invested essentially huge sums
Speaker 2: in AI, and they'd made a lot of progress. They'd
Speaker 2: written a lot of good research papers, you know, as
Speaker 2: Nadella and the other Microsoft executive saw it, but they
Speaker 2: hadn't really had products, right. It was a lot of
Speaker 2: really good ideas, but kind of disorganized. And in open
Speaker 2: Ai they saw something you know, much much more focus.
Speaker 2: And that was the thing I think that most appealed
Speaker 2: to Microsoft. That's why they invested in twenty nineteen a
Speaker 2: billion dollars in the company. And that's kind of like
Speaker 2: the beginning of this relationship.
Speaker 1: And where did that money go? How did they then
Speaker 1: use it to rapidly expand this platform.
Speaker 2: Well that's what's so interesting because we talked to Sam
Speaker 2: Altman about this and we said, why didn't you go
Speaker 2: with a normal you know, venture capital firm, And he said,
Speaker 2: the reason is essentially that this kind of technology, the
Speaker 2: thing that they were building, right, it needs these gigantic computers,
Speaker 2: these very very specific configurations of servers with very specific
Speaker 2: chips that cost enormous amounts of money. We're talking hundreds
Speaker 2: of millions, if not billions of dollars just to train
Speaker 2: the model, just to create the model that underlies chat GPT.
Speaker 2: And that's even before you start running it, you start
Speaker 2: answering people's questions. And so the Microsoft deal, right it
Speaker 2: gets reported as a billion dollars and since then, as
Speaker 2: we write in the story, Microsoft has put something like
Speaker 2: thirteen billion into the company in total. But a lot
Speaker 2: of that money, I'd say probably most of that money
Speaker 2: goes right back to Microsoft because open Ai has a
Speaker 2: deal with Microsoft where Microsoft is their cloud provider, and
Speaker 2: that's the big cost here. So Nadella writes Sam Altman
Speaker 2: a check. Sam Altman turns around and starts buying these
Speaker 2: you know, basically time in Azu, which is the Microsoft
Speaker 2: cloud computing business. So that kind of works for everybody, right,
Speaker 2: because on one hand, it seems like Microsoft is is
Speaker 2: outsourcing this really important thing. It's sort of turning over
Speaker 2: a really important piece of intellectual property to an outside company.
Speaker 2: On the other hand, what they're doing is they're building
Speaker 2: this Ai supercomputer, that's what they call it, and that
Speaker 2: is Microsoft intellectual property, that's theirs. They're obviously going to
Speaker 2: continue to sell it to open Ai, but they can
Speaker 2: also sell it to other people. And as these large
Speaker 2: language models, these chatchept like services take off, they have
Speaker 2: the potential to make money not just from open Ai,
Speaker 2: not just from open ai users, but potentially from everybody.
Speaker 1: And Max, how does OpenAI feel about this arrangement.
Speaker 2: Yeah, well, we talked to Sam Altman about it and
Speaker 2: he feels good about it. He feels like it's the
Speaker 2: only way that he can do what he wants to do.
Speaker 1: And you write that the critical I guess breakthrough was
Speaker 1: something called transfer learning. Can you describe what that wasn't
Speaker 1: why it was such a big deal.
Speaker 2: Yeah, So, if you think back to twenty nineteen, the
Speaker 2: hot thing was dryverless cars. The way you train a
Speaker 2: driverless car is you basically have a bunch of people
Speaker 2: sitting in rooms and they're looking at pictures of road
Speaker 2: signs and they they're tagging them. They're saying, that's a roadsign,
Speaker 2: that's a stop sign, that's a speed limit sign. You
Speaker 2: feed that into the machine and you try to get
Speaker 2: it to identify the sign. So you're taking these like
Speaker 2: really specific pieces of data and you're asking a computer
Speaker 2: to identify them. What transfer learning is is instead of
Speaker 2: having really specific data, you just give it all the data, right,
Speaker 2: You just give it like the entire Internet. That's what
Speaker 2: open ai I did, and you try to get it to, say,
Speaker 2: finish a paragraph. And the idea is, if you can
Speaker 2: do that, it might be able to do other things
Speaker 2: because in addition to English on the Internet, there's also
Speaker 2: a lot of computer code. So the first thing that
Speaker 2: happened with open ai and with the Microsoft partnership is
Speaker 2: they figured out that actually, this technology that can complete
Speaker 2: sentences for people can also complete computer code. And that's
Speaker 2: not because they asked it to be able to do that.
Speaker 2: It's just because there's a lot of computer code on
Speaker 2: the Internet, and the same basic process that can be
Speaker 2: used to generate English can be used to generate you know,
Speaker 2: C plus plus. And so that's the idea that you
Speaker 2: could start with something like just write sentences and then
Speaker 2: you could say, I don't know, design a road plan
Speaker 2: or design an app or when you talk to the
Speaker 2: like apocalyptic people would be like design a plan to
Speaker 2: take over the world or something like that. And that's
Speaker 2: what the people who are really worried about open ai
Speaker 2: and similar technologies are scared of.
Speaker 1: And so the notion is instead of trying to teach
Speaker 1: these models to do something specific, you kind of teach
Speaker 1: them to do everything, and in teaching them to do everything,
Speaker 1: they can also do the specific thing.
Speaker 2: Yeah. Absolutely, And so an example of this so the
Speaker 2: Microsoft deal, Right, they started getting involved with open ai
Speaker 2: in twenty nineteen, and this partnership broadens. Microsoft starts incorporating
Speaker 2: the technology to its products. It invests more money, as
Speaker 2: I said, billions of dollars in open ai, and a
Speaker 2: lot of people are really excited about this. But there
Speaker 2: are some skeptics, you know, one of whom is Bill Gates,
Speaker 2: you know, the founder of Microsoft, who is very interested
Speaker 2: in AI, and for a really long time, Gates was
Speaker 2: skeptical because he saw that it made mistakes, which anyone
Speaker 2: who's used open ai or chat, GPT or any of
Speaker 2: these services knows. Right, Gates would be talking to the bot,
Speaker 2: right and it would say somebody's in Cleveland in one sentence,
Speaker 2: and the next sentence, they'd be in a different city,
Speaker 2: you know, Seattle, and it was like the bot didn't
Speaker 2: know what was actually going on. And what he said
Speaker 2: to Sam Altman was that I will believe this is
Speaker 2: good if it can pass the ap bio exam. He
Speaker 2: saw that as a test of does this thing actually understand?
Speaker 2: And I talked to Altman about this because I was wondering, like, so,
Speaker 2: did you like feeded a bunch of bio exams to
Speaker 2: try to teach it? And he was like, no, it's
Speaker 2: just that there's a lot of biology on the internet.
Speaker 2: And they had this demo at Bill Gates' house. Bill
Speaker 2: Gates lives in this you know, palatial you know house
Speaker 2: on Lake Washington in the Seattle area, and the Open
Speaker 2: Ai people showed off this early demo of what was
Speaker 2: called GPT four, the latest model, and it was able
Speaker 2: to pass the bio exam, including the essay portion, and
Speaker 2: so Gates was kind of impressed by that. But the
Speaker 2: thing that really kind of brought Gates and the other
Speaker 2: Microsoft executives around, it's the same thing that impressed everybody else.
Speaker 2: It's that after the demo, the open Ai CEO Greg
Speaker 2: Brockman got up on a keyboard and just started asking questions,
Speaker 2: said what do you want to know? And Gates and
Speaker 2: the other executives just started throwing things out, trying to
Speaker 2: stump it. Gates, you know, is really interested in public health,
Speaker 2: interested in, you know, issues of childhood illness, says, how
Speaker 2: would you talk to the parents of a sick child?
Speaker 2: The open ai bought, you know, spits out a response
Speaker 2: and Gates looks at it and says, you know, this
Speaker 2: is more empathetic than I would be. And for him,
Speaker 2: that was the moment, right, that was the moment where
Speaker 2: he thought, Okay, actually this is ready to be a product.
Speaker 2: This isn't just some kind of research experiment.
Speaker 1: So Bill Gates is now on board. What happened next,
Speaker 1: that's after the break So Max, they persuaded Bill Gates,
Speaker 1: who even though he's not on the board anymore, is
Speaker 1: still a key advisor as the founder of the company.
Speaker 2: What happens then, I mean, what's crazy here is how
Speaker 2: quickly this all happens. So that meeting with Gates was
Speaker 2: in summer of twenty twenty two, so less than a
Speaker 2: year ago. As OpenAI and Microsoft start negotiating and as
Speaker 2: the partnership deepens, A lot of this falls on this
Speaker 2: Microsoft executive named Kevin Scott, who Dina Bass, my co writer,
Speaker 2: and I spent a lot of time with for this story.
Speaker 2: Kevin Scott, He's the chief technology officer. He's a really
Speaker 2: interesting guy and sort of an odd duck in this
Speaker 2: world of basically Stanford and Carnegie Mellon and cal Tech PhDs.
Speaker 2: He's from rural Virginia, essentially from Appalachia, went to the
Speaker 2: University of Lynchburg, basically small local Christian college. Eventually kind
Speaker 2: of works his way, you know, into a UVA PhD program,
Speaker 2: winds up at Google, is a huge success at Google,
Speaker 2: and you know, eventually finds the way to become the
Speaker 2: chief Technology officer of Microsoft, where Nadella basically makes it
Speaker 2: his mission to kind of get all these AI programs
Speaker 2: that are kind of all over the place and put
Speaker 2: them in some kind of order. So the funny thing
Speaker 2: about Microsoft has done some really great AI research. They
Speaker 2: also have had some sort of infamous AI products. I
Speaker 2: think probably the first chatbot that anyone ever used, or
Speaker 2: most people used, was Clippy. Most people encountered Clippy, you
Speaker 2: know in Microsoft Word where you'd start typing something, you
Speaker 2: type the word deer, and then all of a sudden,
Speaker 2: this little, you know, anthropomorphic paper clip with gigantic googly
Speaker 2: eyes would come there and sort of like mansplain letters
Speaker 2: to you. It'd be like, well, it looks like you're
Speaker 2: writing deer, but do you need help writing a letter?
Speaker 2: And he would sort of essentially interrupt your work, and
Speaker 2: it became this kind of like gag. There are all
Speaker 2: these funny memes on the Internet of of you know, Clippy,
Speaker 2: you know, interrupting things and just kind of like the
Speaker 2: weird weakness of what otherwise is like an amazing piece
Speaker 2: of software, you know, Microsoft Word. People kind of make
Speaker 2: fun of it sometimes, but like, right, it's one of
Speaker 2: the most successful piece of software of all time, and
Speaker 2: they just stuck a talking paper clip in it for
Speaker 2: no particularly good reason. The other one Microsoft chatbot AI
Speaker 2: thing was this thing called Tay, which happened in twenty sixteen.
Speaker 2: Tay was sort of an update to Clippy where they
Speaker 2: wanted to have a bot that would sort of learn
Speaker 2: from Twitter and would sound like a typical teenager, and
Speaker 2: within about i don't know, twenty four hours, Tay had
Speaker 2: been deluged with kind of what you might imagine is
Speaker 2: on Twitter. She went from being like a nice, helpful
Speaker 2: teenager to just like sounding like the most obnoxious person
Speaker 2: on you know, on four Chan or on Reddit or whatever,
Speaker 2: and they had to pull it.
Speaker 1: What does Microsoft say about Clippy and Tay when they
Speaker 1: look back on their early experiments with this technology.
Speaker 2: From Microsoft's point of view, you know, Tay was done
Speaker 2: in by people who were manipulating Tay, sending it hate speech,
Speaker 2: you know, trying to get it to say the worst
Speaker 2: possible things. And so Kevin Scott has kind of the
Speaker 2: weight of all this kind of history of Microsoft's past
Speaker 2: bad efforts, as well as this research program that was
Speaker 2: good but just kind of unfocused.
Speaker 1: So now Kevin Scott has this mandate to take this
Speaker 1: very powerful AI chat generator and make use of it,
Speaker 1: and he's got a lot of money to do it.
Speaker 1: And what did they.
Speaker 2: Do before this the meeting with Bill Gates? They had
Speaker 2: had one product, which was GitHub. So GitHub is a
Speaker 2: product for software coders. And they'd sort of figured out
Speaker 2: that at GPT, or really GPT three, which is the
Speaker 2: underlying technology, that in addition to being able to finish sentences,
Speaker 2: it could finish code. So they created this thing called
Speaker 2: Copilot for GitHub and it's like auto complete, you know,
Speaker 2: autocomplete on your text message where you're typing a message
Speaker 2: and it sort of tries to guess what you're about
Speaker 2: to say. It was like that except for software code,
Speaker 2: and it was pretty successful. They were charging money for
Speaker 2: it. It costs, you know, between ten and twenty dollars a
Speaker 2: month per person, so real money. And that was it.
Speaker 2: That's all they had. And for the next one, as
Speaker 2: part of this big push, they chose Bing. It's kind
Speaker 2: of like the Clippy of search engines, right, it's this
Speaker 2: like kind of goofy, unsuccessful bit of a head scratcher
Speaker 2: of a competitor to Google. You know a lot of
Speaker 2: people like Bing, but it's never really taken off. I
Speaker 2: think partly because Google just dominates the market, and I
Speaker 2: think they just thought, well, search is a really big business.
Speaker 2: These chat bots are potentially pretty useful for search because
Speaker 2: you could ask it instead of searching for a restaurant,
Speaker 2: you'd say, what's the best restaurant? And being the stakes
Speaker 2: are low, right, if it's terrible, they're not that many
Speaker 2: BING users out there to be up in arms.
Speaker 1: So what happened when they put this technology into being
Speaker 1: in February.
Speaker 2: You know, Sati Ndella has an event. He gets up
Speaker 2: on stage and he shows off this technology and everyone
Speaker 2: is really impressed. Right. Bing is based on the most
Speaker 2: advanced version of open aiyes model, it's called GPT four.
Speaker 2: During this demo they showed it you know, writing letters
Speaker 2: and planning menus and things like that.
Speaker 1: So you're not just using being to say, you know,
Speaker 1: find me this restaurant's website. You're actually asking you questions
Speaker 1: and then it retrieves it. So it's searching for answers,
Speaker 1: not just for results.
Speaker 2: Yes, and this is really exciting. I mean, first of all,
Speaker 2: it's exciting because it could be potentially easier, right, instead
Speaker 2: of spending you know, an hour on Google searching for
Speaker 2: restaurants in Paris and hotels in Paris and activity in
Speaker 2: Paris to make my Parris itinerary, you could just ask
Speaker 2: a bot to make you one, right, and they'll do it.
Speaker 2: They'll give you something, you know, within I don't know,
Speaker 2: ninety seconds or whatever, And that's really exciting. Potentially makes
Speaker 2: things easier, I guess if you're traveling. But from a
Speaker 2: business perspective, that's like a huge moment because it could
Speaker 2: potentially you know, break a lot of the search business
Speaker 2: because if you don't spend that hour on Google, if
Speaker 2: you're not clicking all these links, Google is not able
Speaker 2: to put ads in front of you. So you know,
Speaker 2: immediately you saw Google stock fall, you saw Microsoft stock
Speaker 2: go up, and then people started playing around with Being.
Speaker 2: You had all these reporters and Twitter users spending time
Speaker 2: with Being and getting it to do some weird things.
Speaker 2: The most famous one is Kevin Russ, who's a tech
Speaker 2: columnist of the New York Times, had this like two
Speaker 2: hour conversation with Being about love where Being became an
Speaker 2: alter ego called Sydney. I mean, it sounds insane when
Speaker 2: when I say it and told him to leave his
Speaker 2: wife and said no, no, you love me and got
Speaker 2: really aggressive and just kind of flipped out. You had
Speaker 2: another sort of famous tech analyst, Ben Thompson, got bing
Speaker 2: to adopt a different alter ego, venom As, kind of
Speaker 2: like an evil version of Sydney, kind of fantasizing about
Speaker 2: how you would extract revenge on his enemies. Being told
Speaker 2: the Verge, you know, it's a tech publication that it
Speaker 2: was spying on Microsoft employees using their webcams. Like, so
Speaker 2: not only making something up, but making something like you know,
Speaker 2: potentially pretty damaging to Microsoft and so on.
Speaker 1: And Max, what is Microsoft say about these encounters you
Speaker 1: described that people had with being so.
Speaker 2: From Microsoft's perspective, the problem wasn't the software, it was
Speaker 2: the people who were using it. They were, as CTO
Speaker 2: Kevin Scott said to us, basically trying to goat it
Speaker 2: in to say the worst possible things. They just they're
Speaker 2: moving ahead. They're not actually stopping. I mean, they made
Speaker 2: some tweaks to how BING works, but it's not like
Speaker 2: they're not going to bring this stuff to office. They're
Speaker 2: still going to bring it to office. They're going to
Speaker 2: bring it to who what is like probably the biggest
Speaker 2: and most important piece of software in the world, which
Speaker 2: is you know, these productivity apps that Microsoft sells in
Speaker 2: other words, Microsoft Word, Microsoft Excel, Microsoft PowerPoint, And this
Speaker 2: is already happening like inside of certain companies and stuff.
Speaker 2: You will be able to be, you know, working on
Speaker 2: a chart and Excel and you'll be able to ask
Speaker 2: the copilot to make a visualization of that, or you'll
Speaker 2: be able to, you know, as I said, like have
Speaker 2: it essentially create rough versions of your PowerPoint slides. For
Speaker 2: a presentation, and the idea here is not to have
Speaker 2: it sort of replace your work. It's not going to
Speaker 2: do your presentation for you, but it just might make
Speaker 2: it a lot easier. The way that a Microsoft executive
Speaker 2: who works on these products told us is it's like
Speaker 2: it might do maybe half of the work right. You're
Speaker 2: still going to have to keep an eye on it.
Speaker 2: You're going to have to make sure it doesn't make
Speaker 2: any huge mistakes, it doesn't make anything up, and it's
Speaker 2: not going to do everything, but it hopefully will make
Speaker 2: things like easier.
Speaker 1: When we come back. Microsoft has big future plans for AI,
Speaker 1: so now max. In a really short amount of time,
Speaker 1: this went from novelty to a core part of Microsoft's
Speaker 1: business and has really leapfroged the company in a lot
Speaker 1: of ways ahead of some of its biggest competitors.
Speaker 2: If you went back a couple of years and you
Speaker 2: asked people at Silicon Valley, like, who's in the lead
Speaker 2: in AI, they would have said Google. And I think
Speaker 2: everyone agrees now that Microsoft is either kind of like
Speaker 2: in the lead or has at least gotten to parody
Speaker 2: with Google, which is huge achievement because Google Larry Page,
Speaker 2: Sergey Brin. I mean, they have been really focused on
Speaker 2: this for a very long time. We know about the
Speaker 2: Google self driving car. There's this thing called deep Mind,
Speaker 2: which before open Ai was the hot you know, research lab,
Speaker 2: which is owned by Google. And on the business front,
Speaker 2: I mean, they are looking like they are in a
Speaker 2: very good position. This isn't to say that this couldn't
Speaker 2: like all come crashing down or I think it's very
Speaker 2: possible that these technologies just don't work as well as
Speaker 2: they're hoping and aren't as useful as people think. But
Speaker 2: here's the thing. Microsoft is very very good at extracting
Speaker 2: money out of software. Right for basically two decades, there
Speaker 2: have been free alternatives to Microsoft Office, Word Excel. You
Speaker 2: can get a free version of them. And you've been
Speaker 2: able to get a free version of these things for decades,
Speaker 2: and yet they're pulling in, you know, something like forty
Speaker 2: five billion dollars a year on licensing fees on these technologies.
Speaker 2: And so their plan here with these chatbots is essentially
Speaker 2: use them to drive more revenue to that thing. So
Speaker 2: from now on, if you're you're gonna pay your ninety
Speaker 2: nine dollars a year for your office subscription, if they
Speaker 2: price it like GitHub, it's going to be you know,
Speaker 2: a ten dollars a month. Add on. A lot of
Speaker 2: people and especially a lot of businesses are going to
Speaker 2: feel like they need this and they're going to pay
Speaker 2: for it. And Microsoft, as I say, is very good
Speaker 2: at convincing people to pay for its software. It's kind
Speaker 2: of like what the company is almost best at. The
Speaker 2: other thing that they have is this supercomputer that I
Speaker 2: brought up, where it's not just that Microsoft can put
Speaker 2: open AI in all its apps, it's that the entire
Speaker 2: world of business is attempting to integrate AI into their products,
Speaker 2: not just Microsoft products, but other products, and they're going
Speaker 2: to need computers to do that. And Microsoft right now
Speaker 2: is in the best position and position to sell those services,
Speaker 2: the kind of cloud services to everyone. And so when
Speaker 2: you add those two things up, you're talking about a
Speaker 2: huge amount of revenue. We mentioned this in the story,
Speaker 2: but one analyst has a model, which I think is debatable,
Speaker 2: but this is like a legitimate model where he's talking
Speaker 2: about by twenty twenty seven, somewhere between ten billion at
Speaker 2: the low end and one hundred billion at the high
Speaker 2: end of additional revenue to this company. So that's like
Speaker 2: if they get to one hundred billion, that would be
Speaker 2: like it's like adding three netflixes to a company that's
Speaker 2: already the second largest in the world by market cap.
Speaker 2: I do think it's important to say that the other
Speaker 2: companies aren't standing still, right. They see the same opportunities
Speaker 2: at Microsoft. See so Google is frantically trying to put
Speaker 2: this technology into their apps, and I think there's reason
Speaker 2: to think Microsoft is in a better position because of
Speaker 2: the commercial factors I brought up. But you could imagine
Speaker 2: a situation where in a year from now or two
Speaker 2: years from now, people are a little less excited about
Speaker 2: it all of a sudden, you know, you maybe you
Speaker 2: don't want to spend extra money for a chat GBT thing,
Speaker 2: where then it becomes a little more challenging for Microsoft.
Speaker 2: But even then, I think it's still going to be
Speaker 2: a substantial amount of revenue for this company, just because
Speaker 2: they have such a big footprint and they're so far
Speaker 2: ahead of everyone else. Max.
Speaker 1: What does Microsoft say about these growing concerns about sort
Speaker 1: of doomsday scenarios having to do with AI.
Speaker 2: They do not see it as a thing that's going
Speaker 2: to end the world. They see a computing platform. The
Speaker 2: Microsoft people right, are not super focused on the end
Speaker 2: the world questions, which sort of makes sense when you're
Speaker 2: talking about like a copilot for Excel. It's hard to
Speaker 2: imagine like spell check taking over the world, And so
Speaker 2: what they're really interested in is sort of like productivity.
Speaker 2: How can this make workers better? And what they say
Speaker 2: about these kind of other concerns, they say, like it's copilot,
Speaker 2: it's not autopilot, and it really is not that useful
Speaker 2: as a replacement. It's only useful as a thing that
Speaker 2: can like sort of help you along. I think there
Speaker 2: are questions about how applicable that is, whether it actually
Speaker 2: ends up happening, whether these technologies get used responsibly, But
Speaker 2: that's kind of their point of view that like, as
Speaker 2: long as humans are in the mix, a lot of
Speaker 2: these risks are not that great.
Speaker 1: Max, thanks so much for coming on the show.
Speaker 2: Thanks for keeping this human in the mix.
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