Microsoft’s bold move into artificial intelligence has been marked by significant spending and a CEO betting on a technology with enormous potential and risks. Earlier this year, CEO Satya Nadella finalized a surprising deal with Inflection AI, a Silicon Valley startup led by Mustafa Suleyman, co-founder of DeepMind.
Despite Suleyman’s mixed reputation and Inflection AI’s lack of profitability, Microsoft paid over $650 million to license its technology, hired most of its staff, and appointed Suleyman to oversee a $12 billion segment of Microsoft’s business.
Nadella has made several risky AI investments, including a $13 billion commitment to OpenAI over the past five years.
He has pushed to integrate AI across Microsoft’s products, even though the technology is not yet fully reliable. Nadella sees the AI boom as a crucial opportunity for Microsoft to dominate a new technology wave, after missing out on previous ones like the dot-com boom and smartphones.
Investors have responded positively, with Microsoft’s value increasing by 70% to over $3.3 trillion.
Nadella’s AI journey began in earnest in 2018 when Google’s BERT technology highlighted Microsoft’s infrastructure limitations.
This realization led to a partnership with OpenAI, resulting in a $1 billion investment to build an AI supercomputer. Despite skepticism, this move positioned Microsoft as a leader in AI innovation.
In 2021, OpenAI faced internal turmoil, but Nadella remained committed, developing successful products like GitHub Copilot. By 2022, he was convinced of AI’s transformative potential, pushing for its integration into all Microsoft products, starting with Bing.
A crisis at OpenAI in late 2022 nearly derailed Nadella’s plans when its board ousted CEO Sam Altman. Nadella intervened, offering Altman and his team positions at Microsoft, which pressured the board to reinstate Altman. This episode underscored Microsoft’s dependence on OpenAI and motivated Nadella to diversify AI partnerships.
Nadella’s recent deal with Inflection AI aims to advance AI “agents” for personal online assistance. Suleyman, now leading this initiative at Microsoft, has been given substantial resources and a large team to drive this vision forward, signaling a major shift in how people interact with technology.
