Microsoft and Spanish Steps AI Strategy
June 9, 2026
Another dinobaby post. No AI unless it is an image. This dinobaby is not Grandma Moses, just Grandpa Arnold.
Microsoft announced more than a half dozen AI models. “At Build 2026, Microsoft Doubles Down on Proprietary AI Models to Win Every Layer of the AI Stack” reports:
Microsoft CEO Satya Nadella kicked off the annual Build 2026 keynote in San Francisco, doubling down on AI agents and proprietary models as the company seeks to compete more directly with OpenAI, Google, and Anthropic…. The company took its first major step toward reducing its dependence on OpenAI, the creator of ChatGPT, in which it has invested in billions.
I think this is the Spanish steps approach to AI. In Rome, there is an impressive staircase. In the 18th century a connection between the Piazza di Spagna at the foot of the hill and a church on top of the hill was needed. Hence, steps were constructed. Now the steps metaphorically connect many things; for example, tourists to the upscale shops and true believers with the divine technology known as artificial intelligence.
A visionary worker knows that building the Spanish Steps using stone, dirt, and hand tools was stupid. This wizard sees the future and intuitively knows that advanced technology is within reach given enough time and money. The visionary is now selling trinkets from the Via dei Condotti sidewalk Thanks, MidJourney. Good enough.
Microsoft has the commercial and US government markets in its grip. The people who want access to the tools on top the hill, not just the handbags and trinkets down below need digital Spanish Steps. That’s what Microsoft’s AI announcements are supposed to deliver.
If you want to code something, Microsoft offers MAI-Code-1-Flash.
Do you want an Android-based operating system, Project Soltera has you covered.
Do you need a 24×7 smart assistant. Microsoft offers Scout.
Need a quantum chip to power your next smartphone? Microsoft has Majorana 2.
Need a text centric LLM? Microsoft has MAI-Thinking-1.
Need voice to text? You will have the to-be MAI-Transcribe-1.5.
Image hunger? Use MAI-Image-2.5.
Want to convert that smart software enabled Word document to a podcast? Hit up MAI-Voice-2.
I am not sure I have identified the AI blocks that comprise this Spanish Step construction. I do know there are quite a few blocks to help a customer get from the basic software to the top of the hill. Microsoft believes that its faithful and some converts will want to ascend to the AI faithful’s meeting point.
The only problem is that Microsoft’s marketing is more effective than its ability to capture the attention of those who want AI systems. I don’t think the current approach to AI is the “top of the hill.” I think Microsoft and the other big US players are building steps. From my point of view, the blocks are cut from the same conceptual cloth. The production of the blocks is expensive and requires continual investment to keep them stable.
Some people who have climbed up the hill are reporting that the journey was difficult and expensive. More information pops up in my newsfeed that the reward for reaching the AI hilltop is not worth the effort. Medical uses of AI gives some pause. Autonomous weapons relying on AI are definitely exciting. Answering basic questions with incorrect information remains a persistent problem. (Just ask an attorney who trusted AI and learned that a court was not impressed with fake information.) For a real thrill, explain how a self driving car ends up blocking residents in Cow Hollow in San Francisco.
Several observations:
- AI is perceived by the true believers as “the next big thing.”
- The proof of the value of AI is that “if we build it, they will come.” That’s been partially correct, but now those who came are finding the game unsatisfying and those in the stands stand a chance of getting beaned with a foul ball.
- The productivity payoffs are difficult to quantify. Marketing is not the type of evidence that makes me comfortable relying on AI for much of anything
- Benefits from specific use of AI systems — maybe even those developed by Microsoft — will perform well in certain use cases. But the connector from regular users to the glorious meeting place at the top of the hill is simply not complete.
Net net: Microsoft wants to “own the AI stack” as someone said. That’s a good idea for a large company. However, I am not convinced that Microsoft can do AI that is more effective than what Chinese professionals, the Google, the entertaining genius Elon Musk, the quirky yet delightful Mark Zuckerberg, the fluid thinker at Anthropic, or any of the other AI construction firms can create. I harbor a belief that an alternative approach or different innovations will deliver a more useful AI stack. That means that the Spanish Steps will be replaced with an escalator or, if some Stanford or MIT wizards are involved, a teleportation device. Can one define “teleportation”? Can one define “artificial intelligence”?
Stephen E Arnold, June 9, 2026
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