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Knowing when to compete and when to collaborate is one of the keys to winning in business.
Achieving these wins will require both companies to work together, he said. Nadella said that in OpenAI’s view, Microsoft will provide the infrastructure and OpenAI will build the AI models. But that doesn’t mean they don’t compete with each other.
“They’ll build apps, we’ll build apps, third parties will build apps, and so on,” he said. “There will be competition, and there will be fully vertically integrated competition.”
For example, Microsoft recently announced that it is building an in-house AI model called MAI-1 from a dataset that includes text from ChatGPT as well as external sources such as public information on the internet. The model is separate from OpenAI’s GPT-4 and is overseen by DeepMind founder Mustafa Suleiman, who left for Microsoft in March.
Nadella once said about OpenAI that Microsoft will be “below them, above them and around them.” “At the end of the day, we need to be open-minded and accept that sometimes partnerships are the only way forward,” he told Stratechery.
And that philosophy doesn’t just apply to Microsoft and OpenAI, it spans all divisions of the company.
“What I think about Microsoft is, at the end of the day, we’re not a conglomerate. We have to have a true theory of architectural consistency. We don’t just have to be integrated, we have to perform best when the integration and competitiveness of every layer of the stack is aligned,” Nadella said.