Microsoft’s AI setback: an imaginary letter
Breakingviews imagines the letter that Microsoft (MSFT.O) Chief Executive Satya Nadella might write to shareholders after the artificial intelligence bubble deflates.
This is a painful letter for me to write. Artificial intelligence has been a generational opportunity for Microsoft, and it remains one. To ensure that our next 50 years are as successful and influential as the first 50, we decided to deploy capital, quickly and in large quantities, on a technology that is already reshaping how people work and play. Although our company will keep capitalizing on AI and reinventing itself to do so, recent developments have prompted us to reassess the quantum and pace at which we pursue these initiatives. They also have forced us to revisit the value of our existing investments.
Although Microsoft is confident about the prospects for generative AI, we cannot ignore some of the emerging realities. The seemingly boundless improvements from adding data and computing power have slowed considerably. Instead of just getting bigger, the industry will have to get smarter about training models. In the meantime, our customers are catching their breath, analyzing the technology’s genuine productivity benefits and trying to balance it with the pressure to rein in costs. A handful of unfortunate cases in which a chatbot “hallucinated” while advising emergency medical teams have undermined public faith in machine learning. Competition is also on the rise, while regulators are intensifying efforts to prevent unrestrained growth in artificial intelligence.
