Microsoft Invested in OpenAI Due to Google’s fears, email shows

Microsoft made a significant investment of $1 billion in OpenAI in 2019 due to concerns that Google was the year of ahead of it when it came to expanding its AI initiatives. In an email exchange between Microsoft CTO Kevin Scott, CEO Satya Nadella, and co-founder Bill Gates, some of the key discussions regarding an investment opportunity are revealed. The email, titled “Thoughts on OpenAI,” sheds light on the high-level conversations that took place in the months before Microsoft’s partnership announcement.

The US Justice Department made the email public on Tuesday as part of its ongoing antitrust case against Google.

“We are several years behind the competition when it comes to machine learning scale,” Scott writes in an email to Nadella and Bill Gates on June 12, 2019. He talks about how Microsoft engineers had to work for six months to copy Google’s BERT language model and train it “because our infrastructure wasn’t up to the task.”

Scott says he didn’t believe in OpenAI and Google DeepMind’s AI work at first when the companies were competing to see who “could achieve the most impressive game-playing stunt.” This is a clear reference to Google DeepMind’s AlphaGo Zero demos. When things moved on to natural language processing models, Scott was impressed even more quickly. “I got very, very worried as I dug in to try to figure out where all of our model training skills were lacking compared to Google’s,” Scott wrote.

Scott said that some of Google’s early AI models gave it an edge over Bing. He also said that Google’s autocomplete features in Gmail were “getting scarily good” in 2019.

In response to Scott’s thoughts on OpenAI, Nadella sent them to Microsoft CFO Amy Hood and said, “This is why I want to do this.” Hood is a key member of Microsoft’s senior leadership team, in charge of the company’s financial goals and keeping Microsoft’s spending in check.

You can read the heavily redacted email thread below. It seems to be a response to either Nadella or Bill Gates. Despite Gates resigning from the Microsoft board in 2020 due to an affair investigation, he continues to play a significant role in Microsoft’s relationship with OpenAI. It is unclear from this internal email who initiated discussions about OpenAI in 2019, but earlier this week, reports suggested that Gates had been meeting with OpenAI regularly since 2016 and played a significant role in making the deal happen.

Microsoft has now put more than $13 billion into OpenAI and has used its models in Office apps, the Bing search engine, Edge, and even Windows itself. People now see Microsoft as a leader in AI instead of falling behind, which was what the company was afraid of five years ago. Nadella also recently said that AI and security will be his top two priorities for Microsoft in 2024 and beyond. This means that Microsoft products will continue to get AI features.