Microsoft invests $1 billion into artificial general intelligence (AGI)

Microsoft has invested $1 billion into OpenAI, the voluntary organisation charged with the somewhat bold task of saving humanity, the aim: to develop artificial general intelligence.

Article updated: 30 July 2019 11:00am Author: Michael Baxter

Microsoft has been a laggard in the AI stakes. While Alphabet/Google, Amazon, Facebook, Nvidia and Tesla are the names that typically roll off the tongue when discussing AI, neither Microsoft nor Apple tend to come to mind.

We can look at Apple another day, but Microsoft has made its move.

First, let me explain artificial general intelligence. Up to now, each AI product has only been applied in the narrowest of applications.

Let me drill down a bit further. When technology people talk about AI, what they really mean is machine learning, or ML. You could argue that ML is a subset of AI, but right now it is the only subset that seems to have any real meaning. It entails algorithms, fed data and learning from it. A scary aspect of ML is that the resulting applications are not fully understood. So an AI algorithm might learn how to identify a dog, or even a labrador, but no one is quite sure how.

But it is very narrow, which is why it is sometimes called narrow AI.

Us humans; we can be quite clever (yes, I know it’s hard to believe). Not only can we usually identify a labrador, but we can cook a meal or cross the road safely — sometimes.

AI can be enormously clever in the specific field it trained in, and this cleverness is expected to generate a huge amount of wealth — PwC has projected that AI could contribute $15.7 trillion to the global economy in 2030.

But that’s narrow AI.

Suppose, instead, we got artificial general intelligence or AGI.

OpenAI likens it to combining the talents of Curie, Turing, and Bach — presumably that’s Marie Curie, or Madame Curie, Alan Turing and JS Bach. We might end up with a computer that can cure cancer by playing the Brandenburg Concertos.

OpenAI itself was set up by Elon Musk and Peter Thiel — the two men were both closely involved in the formation of PayPal. They don’t always appear to see eye to eye, but they both seem to agree that AI poses a potential long-term existential threat to humanity. So they set up OpenAI with the goal of saving us, by creating artificial general intelligence that is safe, with ethics hard coded in.

Experts seem to agree that the development of artificial general intelligence is many years off, but creating cutting edge AI stuff is expensive, very expensive. Some of the top AI developers at OpenAI command salaries in excess of a million dollars a year. Some question how an organisation that claims to be voluntary can justify such high wages; such criticisms miss the point. Talent is expensive, and OpenAI needs talent to fulfil its purpose.

But it has to generate revenue somehow, it can’t expect investors to plough in billions and billions of dollars for no return.

So here is the cunning plan: to borrow the words from OpenAI itself: “The most obvious way to cover costs is to build a product, but that would mean changing our focus. Instead, we intend to license some of our pre-AGI technologies.”

That’s where Microsoft comes in. Sure it is throwing a lot of money into the pot, but in return Microsoft’s cloud platform, Azure will be its exclusive cloud product. OpenAI said that the deal entails “Microsoft becoming our preferred partner for commercialising them.”

The cloud is key technology for the advancement of AI. Back in the day, computers were massive and only giant companies or governments could afford them. The most advanced forms of AI require an awful lot of computing power too, but the cloud means that organisations only need to pay for such computer power when they need it. They can turn computing up or down, pretty much as if it is a tap.

So the cloud is the key for OpenAI to be able to generate revenue by providing access to its ‘pre-AGI’ technology.

As Satya Nadella, the CEO of Microsoft, said: “By bringing together OpenAI’s breakthrough technology with new Azure AI supercomputing technologies, our ambition is to democratise AI.”

In this case, “to democratise AI” is code for making it accessible to companies that would not have been able to access it otherwise.

Open AI said: “We want AGI to work with people to solve currently intractable multi-disciplinary problems, including global challenges such as climate change, affordable and high-quality healthcare, and personalised education. We think its impact should be to give everyone economic freedom to pursue what they find most fulfilling, creating new opportunities for all of our lives that are unimaginable today.”

For Microsoft, it is a nifty way to jump on the AI bandwagon, using Azure to monetise the work of some the finest minds in the world in the field of AI.

As I write, Microsoft is the biggest company in the world by market cap. It’s not noted for producing state of the art technology, but the deal with OpenAI seems to me to demonstrate that it has not lost its ability to make money off the back of either the super smart, like OpenAI, or in the case of the early days: the super big like IBM.


These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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