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The collaboration between Microsoft and OpenAI has been greatly advantageous for both parties. Microsoft’s investment has spurred AI advancements, boosting its enterprise cloud and AI services. Meanwhile, OpenAI has utilized Microsoft’s financial backing, computing power, and market access to transform from a research lab into a flourishing AI company, potentially valued at around $86 billion. Nevertheless, Microsoft is now strategically reducing its reliance on OpenAI to maximize its gains in the rapidly changing landscape of language models and generative AI technologies.
The Copilot Brand
While OpenAI has made the term GPT widely recognized, Microsoft is pushing hard to make “Copilot” synonymous with its own brand. At the Microsoft Ignite conference, several Copilot-related announcements were made, including major updates to Copilot for Microsoft 365, new Copilots for Service and Sales, and even renaming Bing Chat to Copilot.
Microsoft also introduced Copilot Studio, a low-code tool designed to customize Copilot for Microsoft 365 and build standalone copilots. Copilot Studio offers various conversational features, including custom GPTs and generative AI plugins. Users can create, test, and deploy standalone copilots and custom GPTs, connecting them to external data sources like SAP. Copilot Studio is similar to OpenAI’s GPT Builder and GPT Store but includes additional enterprise features like data access and user controls.
The Expansion of Large Language Models
The growth of large language models (LLMs) is similar to the early days of mobile computing when Apple coined the phrase “There’s an app for that.” Today, LLMs are becoming so common that they are finding their way into almost every application, sometimes without a clear use case. The question arises: will the new catchphrase be “There is a GPT for that” or “There is a Copilot for that”?
Investing in Open-Source LLMs
OpenAI has kept its models closed-source, creating a profitable business through its paid API platform and ChatGPT application. However, there is a growing market for open-source models like Llama, Mistral, Falcon, Cerebras GPT, and MPT. Although setting up an open-source model is not as simple as using an out-of-the-box solution like GPT-4, it offers benefits like better control over data, performance, infrastructure, and customization.
There have been rapid advancements in tools for training, customizing, quantizing, integrating, and deploying open-source models at scale. Many companies now offer services that allow organizations to easily run and fine-tune their custom LLMs on their choice of on-premise or cloud servers. The market for open-source LLMs could potentially outgrow that of closed-source models like ChatGPT due to its flexibility and diverse applications.
Despite its significant investment in OpenAI, Microsoft is also exploring the open-source model market. Earlier this year, Microsoft added support for open-source models like Llama 2, Mistral, and Falcon on its Azure AI Studio. At Ignite 2023, it advanced further, offering “model as a service” support for Llama 2 and Mistral models, making them as easy to use as API calls to OpenAI models.
The Future of Microsoft and OpenAI
Just as Google wasn’t the first search engine, Facebook wasn’t the first social network, and Apple didn’t make the first smartphone, OpenAI, while currently leading in language models and generative AI, hasn’t yet secured its spot as the definitive leader in the field. Another startup could potentially rise to the top.
As the AI market evolves, Microsoft is diversifying its strategies. By supporting both proprietary and open-source models and expanding its Copilot brand, Microsoft is positioning itself to stay significant in the AI market, whatever direction its relationship with OpenAI takes.