Microsoft and OpenAI: An Expensive Sitcom
July 1, 2025
No smart software involved. Just an addled dinobaby.
I remember how clever I thought the book title “Who Says Elephants Can’t Dance?: Leading a Great Enterprise Through Dramatic Change.” I find the break dancing content between Microsoft and OpenAI even more amusing. Bloomberg “real” news reported that Microsoft is “struggling to sell its Copilot solutions. Why? Those Microsoft customers want OpenAI’s ChatGPT. That’s a hoot.
Computerworld adds to this side show more Monte Python twists. “Microsoft and OpenAI: Will They Opt for the Nuclear Option?” (I am not too keen on the use of the word “nuclear.” People bandy it about without understanding exactly what the actual consequences of such an opton means. Please, do a bit of homework before suggesting that two enterprises are doing anything remotely similar.)
The estimable Computerworld reports:
Microsoft needs access to OpenAI technologies to keep its worldwide lead in AI and grow its valuation beyond its current more than $3.5 trillion. OpenAI needs Microsoft to sign a deal so the company can go public via an IPO. Without an IPO, the company isn’t likely to keep its highly valued AI researchers — they’ll probably be poached by companies willing to pay hundreds of millions of dollars for the talent.
The problem seems to be that Microsoft is trying to sell its version of smart software. The enterprise customers and even dinobabies like myself prefer the hallucinatory and unpredictable ChatGPT to the downright weirdness of Copilot in Notepad. The Computerworld story says:
Hovering over it all is an even bigger wildcard. Microsoft’s and OpenAI’s existing agreement dramatically curtails Microsoft’s rights to OpenAI technologies if the technologies reach what is called artificial general intelligence (AGI) — the point at which AI becomes capable of human reasoning. AGI wasn’t defined in that agreement. But Altman has said he believes AGI might be reached as early as this year.
People cannot agree over beach rights and school taxes. The smart software (which may remain without regulation for a decade) is a much bigger deal. The dollars at stake are huge. Most people do not know that a Board of Directors for a Fortune 1000 company will spend more time arguing about parking spaces than a $300 million acquisition. The reason? Most humans cannot conceive of the numbers of dollars associated with artificial intelligence. If the AI next big thing does not work, quite a few outfits are going to be selling snake oil from tables at flea markets.
Here’s the humorous twist from my vantage point. Microsoft itself kicked off the AI boom with its announcements a couple of years ago. Google, already wondering how it can keep the money gushing to pay the costs of simply being Google, short circuited and hit the switch for Code Red, Yellow, Orange, and probably the color only five people on earth have ever seen.
And what’s happened? The Google-spawned methods aren’t eliminating hallucinations. The OpenAI methods are not eliminating hallucinations. The improvements are more and more difficult to explain. Meanwhile start ups are doing interesting things with AI systems that are good enough for certain use cases. I particularly like consulting and investment firms using AI to get rid of MBAs.
The punch line for this joke is that the Microsoft version of ChatGPT seems to have more brand deliciousness. Microsoft linked with OpenAI, created its own “line of AI,” and now finds that the frisky money burner OpenAI is more popular and can just define artificial general intelligence to its liking and enjoy the philosophical discussions among AI experts and lawyers.
One cannot make this sequence up. Jack Benny’s radio scripts came close, but I think the Microsoft – OpenAI program is a prize winner.
Stephen E Arnold, July 1, 2025
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