As the breakout success of OpenAI‘s ChatGPT triggers a tsunami of excitement over artificial intelligence, Microsoft Corp. is positioning itself at the forefront of what some see as the next wave of technological innovation.
The challenge for Microsoft and other companies: turning this novel and still imperfect technology into a big business.
The software company said last week that it was pouring billions of dollars more into OpenAI. The startup is in the limelight as tech executives and the public have been mesmerized by its chatbot, which can answer difficult questions, write book reports and compose poetry in seconds.
Microsoft earlier this month moved to jump-start the adoption of the technology by offering to let any company apply to use it through its Azure cloud-computing platform.
“The age of AI is upon us, and Microsoft is powering it," Chief Executive Satya Nadella said on a call with analysts last week.
Most interactions with generative AI—so called because it can work off regular language prompts to generate unique creations—have been for fun. Millions have flocked to ChatGPT since it was released in November. OpenAI’s other viral hit, the image-generating Dall-E 2, has flooded the web with user-created pictures.
As a disruptive business, ChatGPT is still finding its feet. There are many problems with it, according to AI researchers. ChatGPT is expensive to run and slow, and it sometimes produces responses that contain made-up facts, they have said.
Gary Marcus, a founder of the machine-learning startup Geometric Intelligence, said that even as OpenAI releases updated versions of GPT, the problems with inaccurate information will continue.
“This particular tech will not solve those problems, so what can you do with these systems that aren’t truthful?" Mr. Marcus asked.
OpenAI didn’t respond to a request for comment. Its chief executive officer, Sam Altman, has said that ChatGPT is an imperfect technology and that it would improve. He said in a tweet last month: “it’s a mistake to be relying on it for anything important right now. it’s a preview of progress; we have lots of work to do on robustness and truthfulness."
Microsoft declined to comment on concerns about the technology. Mr. Nadella has said that ChatGPT’s problems are solvable. “This is not new to just AI," he said at a Wall Street Journal panel at the 2023 World Economic Forum event in Davos, Switzerland, this month. “It’s true in any other category of software today."
Last year Microsoft released GitHub Copilot, a tool within its code-collaboration site GitHub. It uses OpenAI tools to help programmers write and fix computer code. Microsoft estimates that in files in which it is enabled, Copilot generates 40% of the code. Many programmers have said it has become an invaluable tool.
It is a prime example of how this type of AI is best when paired with professionals for specialized tasks, according to some AI users. They have said that the recent advances the technology has made in a short time show how remaining problems can quickly be fixed.
“The rate of change going on—I have not seen anything progress as fast as this ever," said Ben Firshman, the co-founder of the AI infrastructure startup Replicate.
Mr. Nadella has been hailing the technology as the next disruptive advancement in the tech industry. He talks about infusing OpenAI’s innovations throughout Microsoft’s products. The company is already integrating OpenAI’s tech into its Bing search engine and graphical-design software, such as Microsoft Designer.
Some analysts speculate that AI-powered searches could eventually help Microsoft’s Bing search engine take market share away from Alphabet Inc.’s Google, which controls around 90% of the market.
“If it makes Microsoft a competitive search engine, then we’re looking at a different business," said Rishi Jaluria, an analyst for RBC Capital Markets.
Google was the pioneer of some of the generative AI, but its tools haven’t been as widely open to the public. It is now trying to play catch-up.
The more immediate benefit to Microsoft might be to its Azure cloud-computing business. As more companies use generative AI, Microsoft can market Azure as the platform best suited for the job.
“The way Microsoft is going to really commercialize all of this is Azure," Mr. Nadella said in Davos, adding that the company’s cloud “has become the place for anybody and everybody who thinks about AI."
Meta Platforms Inc. and Salesforce Inc. are developing AI tools. Smaller companies are experimenting with OpenAI’s technology to create products and services on Microsoft’s cloud. Microsoft said 200 customers have signed up to use OpenAI’s tools since it opened up the technology for broader use recently.
Yoodli, a Seattle-based company that makes speech-coaching software, was an early adopter. It uses a predecessor to ChatGPT, called GPT-3, to analyze a speaker’s words to determine whether they ramble off topic.
CEO Varun Puri said adding OpenAI’s generative AI tech to Yoodli’s own programs made its offering more robust and allowed it to build new features faster.
“Our idea was always an AI-powered speech coach," he said. “We were going to do it largely [on our own] data set. But generative AI has 100xed that."
Since OpenAI released GPT-3 in a limited fashion in 2020, startups have been using the technology. Founders who have used it have said it can be useful and problematic.
Some worry about flaws in the technology, such as “hallucinations," in which it generates false results with confidence.
That has consigned the technology as more of an add-on feature than a core product. AI-enabled features are often pitched as assistants for professionals.
The startup Lexion uses GPT-3 to help customers draft and amend legal documents. The company’s founders said the product is best used to assist an attorney rather than replacing one. The software generates contractual language that is sometimes wrong, an unacceptable glitch that means it has to be cross-checked.
“We don’t have a good explanation or understanding of why it produced an output or how it produced an output," said Gaurav Oberoi, Lexion’s CEO. “This is the problem with hallucinations."
Because of the limitations of the tech, it is best described as doing the work of a legal intern, he said.
