Microsoft to integrate Open AI products [Finance Fridays]

How does this change the landscape of Tech? Could this their way of establishing their dominance in the Big Tech War?

Jan 21, 2023

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By now I’m sure most of have heard the news,

Microsoft will be integrating OpenAI products into its services. This has a lot of investors and financial experts buzzing. Can Microsoft finally establish its dominance in the Big Tech War, and carve out a lot of respect in the AI space? Meta and Google have really dominated the recent headlines in Machine Learning. Could OpenAI be the secret weapon to turn things around and level out the playing field?

While this news is very exciting it is important to consider all sides and not get swept up by the headlines. A lot of people writing these headlines/pushing the hype are people who haven’t truly done their research and can thus share analysis that is inaccurate or incomplete. As the stories shared many times in this newsletter show, nothing is more dangerous to normal investors like us as market hype. So let us now look into this situation and see how this new play slots into the bigger picture.

UNK UNK UNK UNK building — Photo by Mohammad Rezaie on Unsplash

Key Points

Will OpenAI help Microsoft stand up to Google and Meta- In simple words, nope. And not because of the reason you’re probably thinking off. MS hasn’t been as attention-grabbing as the other 2 Tech Giants in the strides it has made in Machine Learning. However, make no mistakes, MS has been a big player in the field with a lot of respectable work In 2021, I did an analysis of the best ML company of that year. MS came out on top. Put some respect on their name. OpenAI would add a lot of value, but MS is certainly no slouch in the Machine Learning space. People treating the Open AI acquisition thought it will 1000x MS ML research. This is not true and is purely hype.
MS has business data- One thing that I don’t see discussed much is the abundance of business data that MS has access to. Thanks to MS Office, they have datasets and insights that are curated for business users (which are a higher-paying demographic). However, business data is also inherently harder to deal with, even for large language models like ChatGPT (more on this in the next point). This might end up being either a blessing or a curse, depending on how well this is handled. If there is a niche or topic you are very interested in, now would be the time to go deep into it. Understanding business rules and domain logic would make you a viable hire for anyone trying to develop AI for these domains.
The Problem of LLMs- By this time, you have all heard about how ChatGPT will threaten Google. I’ve gotten more forwards about this than Good Morning Texts. Unfortunately, I wish these technologies were as revolutionaries as Tik Tok and LinkedIn intellectuals make them out to be. There are still many many problems with these systems that need to be handled when implementing them in scalable and secure solutions. Unless these challenges are handled, the potential of language models is severely restricted. If you want to know more about these problems, I covered them in my sister publication, AI Made Simple, here. It is completely free, so you will be able to access all content without paywalls. If you’re into detailed AI breakdowns, check it out.
We already have alternatives- Another fact that puts some cold water on the hype is that other companies already have their own variants of language models. Here is a list of 5 massive models, that you can access completely for free. Thus, the integration of these models is will not be as big a competitive advantage as people are making it out to be. Again, Open AI will add a lot of value. No doubt. But it is not the Golden Gun that people are portraying it to be.
How this will affect the business- In the short and medium terms, this will likely increase the stickiness of MS Office. Given the almost monopoly of Microsoft Office, I don’t see them getting new customers based on the AI integrated. This move will more likely just help them retain clients, giving them another reason to stay. In the longer run, it might lead to an increase in consulting-based revenues. The combination of large troves of business data and large computational power should lead to very high-value insights.
How to get into Data- This investment further shows how valuable Data, Machine Learning, and AI are becoming in today’s climate. Not everyone is going to be suited for working in these fields. However, having a functioning understanding of the major ideas will significantly increase your earning potential. If you’d like to talk more about these fields, feel free to reach out. I’ve worked with quite a few people at this point. And, check out my links at the end of every links to check out my content on different platforms.
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