Microsoft expands AI empire overseas, Telecom News, ET Telecom

Written by Julie Jamott

SAN FRANCISCO: Microsoft, the technology giant most closely associated with AI, has announced nearly $10 billion in investments in artificial intelligence overseas in recent months, but it is willing to do more to remain a top player in this important market. It is the price to pay.

The overnight success of OpenAI's ChatGPT has propelled generative AI as Silicon Valley's latest technology revolution and made Microsoft, OpenAI's leading backer, the most valuable company in the world.

Since then, the maker of Windows and its rival Google have been in a fierce competition, rolling out tools that generate text, images, or lines of code based on simple queries.

Meta and Amazon followed suit, introducing their own increasingly sophisticated models and AI assistants.

So far, that bet has paid off, with Microsoft posting another impressive return on Thursday that the company believes has fulfilled the promise of AI.

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Generative AI, touted as a new industrial revolution, “has captured so much value that we can't afford to lose it,” said Jeremy Goldman, an analyst at EMARKETER.

These large companies “have a war chest and feel they have to spend this money on AI, or their war chest is gone,” he added.

– “iPhone Moment” –

But for now, AI is a potential winner for cloud giants like Amazon, Microsoft, and Google, thanks to enhanced applications offered to existing customers for an additional fee.

Dan Ives of Wedbush Securities said the new business is expected to generate an additional $25 billion to $30 billion a year in revenue for Microsoft between now and 2025.

“I think this is Microsoft's 'iPhone Moment,'” Ives said, as Microsoft offers Copilot AI tools to customers.

“The adoption of generative AI and Copilot activities is accelerating, which is driving growth in (the company's) Azure cloud deal flow,” Ives said.

Since the introduction of ChatGPT in 2022, Microsoft has made the biggest push into the AI ​​space, and it's still going strong.

Since February, Microsoft has announced $3.4 billion in AI investments over two years in Germany, $2.1 billion in Spain, and $2.9 billion in Japan.

Under CEO Satya Nadella's leadership, the group is building AI-enabled data centers to support AI training for millions of people and provide the necessary resources to power resource-intensive facilities. We're going to fund energy infrastructure.

“Microsoft is looking for external partners, while Google relies on its internal teams,” Goldman said.

He said foreign investment is attracting attention because it is huge, but ultimately all the major players are putting in a lot of money and “it would be unrealistic to say that their hopes have a monopoly.” said.

– “Let's make a bet” –

Microsoft also has agreements with companies other than its partner OpenAI, which already receives about $13 billion in credits from Windows developers, primarily for access to Azure servers.

High-profile French AI startup Mistral will receive a €15 million investment under a multi-year deal signed in February last year.

Significantly, in a Washington-encouraged venture, Microsoft will invest $1.5 billion in UAE-based AI company G42 and sit on its board of directors.

According to the New York Times and Bloomberg, the G42 has pledged to abandon its partnership with China and prioritize American technology.

“Initially, we thought the AI ​​wars would be fought by a small number of players seeking general purpose AI that could do everything,” Goldman said.

“Now the market is starting to realize that different models will be needed for different needs,” he added.

In fact, cloud companies are now emphasizing the diversity of their products in this area.

Microsoft, for example, just announced the Phi-3 Mini, the first in a new series of small models adapted to simple tasks that can be performed on smartphones and other devices.

Goldman said Microsoft's approach to AI is to “make a bet.” The group is investing in a variety of strategies, “some of which are more likely to be profitable.”

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