Microsoft's revenge

With OpenAI, the tech stalwart might be getting its own back. Microsoft is beating Google at its own game Microsoft appears to be on the cusp of being something it hasn’t been in a long time: cutting-edge. It’s a label the company lost a long time ago after a series of small startups grew to become Microsoft’s biggest competitors. Google, for example, started out as a nimble, innovative upstart and eventually bested Microsoft in browsers, email, and mobile operating systems. But now Microsoft might be the nimble, innovative company that bests Google in artificial intelligence. And it’s all thanks to OpenAI. OpenAI is the hottest AI lab out there with one of the [buzziest and most exciting products](: ChatGPT. And Microsoft is its very good friend. On Monday, the two companies [announced]( that Microsoft was investing $10 billion into OpenAI (that’s on top of the $3 billion Microsoft has given OpenAI since 2019), and Microsoft is [rumored]( to be adding ChatGPT to its Bing search engine. Yeah, that’s right: The much-maligned, little-used Bing might finally become a real competitor to Google’s search. Following the news of Microsoft’s $10 billion investment, Wedbush analyst Daniel Ives [wrote]( that ChatGPT is a “potential game changer” for Microsoft, and that the company was “not going to repeat the same mistakes” of missing out on social and mobile that it made two decades ago. Microsoft “is clearly being aggressive on this front and not going to be left behind,” Ives wrote. There are parallels here, at least on the surface. Microsoft was once the dominant player in computer technology, with its Windows operating system being used by the vast majority of personal computers and its Internet Explorer browser being used by the vast majority of web surfers. And then it [got in trouble]( with the US government, which sued Microsoft for using its dominant position to unfairly drive out competition and take over the then-nascent browser market by bundling Internet Explorer with Windows. The lawsuit tied up Microsoft for years. In that environment, companies like Google emerged, putting out better products that people preferred in an exponentially growing market. Microsoft still did just fine — it remains one of the most valuable companies in the world and is still more valuable than Google — but it doesn’t have the same consumer-facing cachet it did before. Its enterprise clients drive the vast majority of its revenue, through products like Microsoft 365 and Azure. Google, by contrast, is very visible to and much-used by the general consumer, owning everything from Chrome to Gmail to YouTube. Its main revenue source is the digital ads that consumers see as they navigate the internet, and the majority of them are using Google services while they do it. But now Google is the company that’s having antitrust issues, facing [multiple lawsuits]( from the federal government and almost every state and territory in the country that target core parts of its business, including one that was filed [just yesterday](. Those may well clear the way for Microsoft to be the leader in a burgeoning industry with a ton of potential: AI. Companies like OpenAI have made significant advancements in the technology and are now showing it off to the general public, while Google’s competing products are practically nowhere to be found beyond [updates]( on Google’s blog. (Microsoft isn’t entirely in the clear, as the Federal Trade Commission is [currently trying]( to block its massive merger with the gaming company Activision Blizzard, but it’s in a much better position, antitrust-wise.) That’s not to say that Google doesn’t recognize AI’s potential and increasing importance. It’s been working on AI offerings for years, and has some of the best ones. It acquired the AI research lab DeepMind in 2014, before OpenAI even existed. And it developed the [Transformer technology]( that ChatGPT is built on (GPT stands for Generative Prediction Transformer). But Google has held back on giving them the kind of public demonstration that OpenAI has, saying it wants to ensure that its products are responsible and safe before unleashing them. Not helping matters was a claim from a (now-former) engineer that Google’s chatbot technology, LaMDA, [had become sentient](. That’s been widely dismissed (and denied by Google), but it underlined how advanced the technology has become. And it showed the risks not of the technology becoming sentient, but of it being so good that people would think it was and start to treat it as such. But now that ChatGPT is out there, Google has to [play catch-up]( and figure out how it wants to integrate its AI technology into its own offerings. It’s even, [reportedly](, brought back founders Larry Page and Sergey Brin to help out. The company also [recently]( [published a paper]( outlining its approach to AI and how important it is for that approach to be responsible (or Google’s definition of responsible, given the lack of government regulations). “Google is, I think, justified and correct in taking this seriously and taking Microsoft's bid to use this tech to seriously compete with them in advertising, search engines, and other products,” said Derek Leben, a professor at Carnegie Mellon’s business school who focuses on AI ethics. “I think this is a very brilliant move from [Microsoft CEO] Satya Nadella. This is something that is definitely going to position Microsoft very well.” But, Leben warned, there remains the question of whether the benefits of these products outweigh their risks — and if rushing them to market to compete will enhance those risks. “That is indeed the problem with arms races,” he said. “They tend to motivate actors in them to move faster, and accept risks that they otherwise would not have accepted.” Maybe OpenAI’s technology is a [game changer](. Maybe it’s just a [party trick](. Either way, Microsoft’s got it, and a lot of people think it’s amazing. That perception is important. Google now finds itself in a similar position that it helped put Microsoft in two decades ago: hoping it can release something better before it gets passed by. —Sara Morrison, senior reporter [Jonathan Kanter holds up a document as he speaks alongside Attorney General Merrick Garland and Associate Attorney General Vanita Gupta at the Justice Department press podium with flags and a seal behind him. ]( Anna Moneymaker/Getty Images [Google’s bad year is getting worse]( [Layoffs, an AI threat, and now a massive antitrust lawsuit.](   [A graphic of Jeff Bezos, in black-and-white, in front of a collage of $100 dollar bills. ]( Amanda Northrop/Vox [Jeff Bezos wants the world to know he’s a philanthropist]( [The Amazon founder has committed to giving most of his money to charity — and he’s got roughly $120 billion to burn. How’s he doing?](   [Pedestrians pass by the outside windows of a Microsoft store on a busy city street. ]( John Smith/VIEWpress/Corbis via Getty Images [What Microsoft gets from betting billions on the maker of ChatGPT]( [The reported $10 billion investment in OpenAI will keep the hottest AI company on Microsoft’s Azure cloud platform.](    [Learn more about RevenueStripe...](   [Greg Peters, Netflix’s newly appointed co-CEO, speaking at an event in 2018.]( Diarmuid Greene /Web Summit via Getty Images [Netflix now has two CEOs, and neither is founder Reed Hastings]( [Another Big Tech founder (mostly) moves on.](   [Amazon CEO Andy Jassy onstage at the GeekWire Summit.]( David Ryder/Bloomberg via Getty Images [Inside the battle for the future of Amazon]( [After the largest corporate layoffs in its history, the tech giant is at a crossroads.](   Support our work Recode is free for all, thanks in part to financial support from our readers. Will you join them by making a gift today? 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