Microsoft is outsourcing its best AI, tech CEO says — and that’s good news for Google
This photograph shows a screen displaying the logo of Bard AI, a conversational artificial intelligence software application developed by Google, and ChatGPT.
Lionel Bonaventure | Afp | Getty Images
LONDON — Microsoft is handing over the development of all of its best artificial intelligence tools and software to OpenAI, according to one tech CEO — which could be a boon for arch-rival Google.
Todd McKinnon, CEO of identity security firm Okta, told CNBC on Friday that as Google looks to defend its position in search, it is “probably doing the best job of actually not having to outsource their R&D.”
He noted that the so-called transformers that power today’s generative AI technologies “all came from Google.”
Transformers are deep-learning models that learn context and thus meaning by tracking relationships in sequential data, such as words.
“This all came from Google, with DeepMind and the research,” McKinnon said. “I mean, the breakthrough was the research from Google, the transformers which are the algorithm that all these LLMs [large language models] are using to make these big advancements.”
Microsoft as an AI ‘consultancy’
McKinnon added that there’s a risk Microsoft’s position in AI becomes reduced to that of a “consultancy.” Microsoft was not immediately available for comment when contacted by CNBC.
It comes as a number of the firm’s top products — such as Copilot, the firm’s generative AI chatbot, and PCs that are equipped with generative AI software — incorporate tech made by OpenAI, the lab behind artificial intelligence chatbot ChatGPT.
Microsoft has plowed billions of dollars into OpenAI, with its total investment to date reportedly swelling to $13 billion. In Jan. 2023, the tech giant said its investment would “accelerate AI breakthroughs to ensure these benefits are broadly shared with the world.”
“It’s so bizarre,” McKinnon told CNBC. “Imagine working at Microsoft. OpenAI is over there making all the exciting stuff. It’s almost like Microsoft is going to turn into a consulting company.”
Still, Google has a mountain to climb if it’s going to achieve commercial success with its own AI investments.
Microsoft has effectively become the leader in the push toward foundation AI models given its investment in and partnership with OpenAI. This has raised concerns that Google’s position in search could be undermined, as internet users increasingly turn to ChatGPT and other AI chatbots for their search needs.
Google’s own AI efforts, meanwhile, have been beset by a number of public blunders.
Last year, when Google unveiled its Gemini AI chatbot (called Bard at the time), an ad on social media site X showed it giving the wrong answer to a user question. More recently, Google Gemini, as the product is now known, started creating ahistorical images from prompts about history.
Google subsequently pulled its Gemini image generator tool for pictures of people and is yet to reinstate the product while it investigates a fix.
Huge investments needed to succeed
McKinnon noted that AI is a rare segment of technology that has stemmed from substantial backing from major tech giants, rather than organic investments into new product cycles, as was the case with the PC and cloud computing.
“It’s different than other generations of technology like with personal computers, where it was not necessarily the biggest companies in the world that had the advantage, because the whole thing about personal computers is they were truly disruptive in the sense that they were almost toys,” McKinnon said.
“There’s no new AI model that’s like a toy. The only reason OpenAI can get it working is because the great R&D that they needed — $10 billion from Microsoft, to run the model — that wasn’t like a disruptive thing, that was a $10 billion investment.”
He added that Big Tech’s mammoth investments into AI create some competition concerns.
The “biggest risk” McKinnon sees for the cybersecurity industry going forward is that AI issues stemming from the digital giants — such as disinformation — will “stunt the progress in technology.”
“The potential [for] artificial intelligence is really high,” he said, but added: “I actually expect the swing of regulation to go so far that we leave only the biggest, most powerful companies in control of AI.”
Technology
Trump aims to cut $6 billion from NASA budget, shifting $1 billion to Mars-focused missions
Nurphoto | Nurphoto | Getty Images
Chinese bargain retailer Temu changed its business model in the U.S. as the Trump administration’s new rules on low-value shipments took effect Friday.
In recent days, Temu has abruptly shifted its website and app to only display listings for products shipped from U.S.-based warehouses. Items shipped directly from China, which previously blanketed the site, are now labeled as out of stock.
Temu made a name for itself in the U.S. as a destination for ultra-discounted items shipped direct from China, such as $5 sneakers and $1.50 garlic presses. It’s been able to keep prices low because of the so-called de minimis rule, which has allowed items worth $800 or less to enter the country duty-free since 2016.
The loophole expired Friday at 12:01 a.m. EDT as a result of an executive order signed by President Donald Trump in April. Trump briefly suspended the de minimis rule in February before reinstating the provision days later as customs officials struggled to process and collect tariffs on a mountain of low-value packages.
The end of de minimis, as well as Trump’s new 145% tariffs on China, has forced Temu to raise prices, suspend its aggressive online advertising push and now alter the selection of goods available to American shoppers to circumvent higher levies.
A Temu spokesperson confirmed to CNBC that all sales in the U.S. are now handled by local sellers and said they are fulfilled “from within the country.” Temu said pricing for U.S. shoppers “remains unchanged.”
“Temu has been actively recruiting U.S. sellers to join the platform,” the spokesperson said. “The move is designed to help local merchants reach more customers and grow their businesses.”
Before the change, shoppers who attempted to purchase Temu products shipped from China were confronted with “import charges” of between 130% and 150%. The fees often cost more than the individual item and more than doubled the price of many orders.
Temu advertises that local products have “no import charges” and “no extra charges upon delivery.”
The company, which is owned by Chinese e-commerce giant PDD Holdings, has gradually built up its inventory in the U.S. over the past year in anticipation of escalating trade tensions and the removal of de minimis.
Shein, which has also benefited from the loophole, moved to raise prices last week. The fast-fashion retailer added a banner at checkout that says, “Tariffs are included in the price you pay. You’ll never have to pay extra at delivery.”
Many third-party sellers on Amazon rely on Chinese manufacturers to source or assemble their products. The company’s Temu competitor, called Amazon Haul, has relied on de minimis to ship products priced at $20 or less directly from China to the U.S.
Amazon said Tuesday following a dustup with the White House that had it considered showing tariff-related costs on Haul products ahead of the de minimis cutoff but that it has since scrapped those plans.
Prior to Trump’s second term in office, the Biden administration had also looked to curtail the provision. Critics of the de minimis provision argue that it harms American businesses and that it facilitates shipments of fentanyl and other illicit substances because, they say, the packages are less likely to be inspected by customs agents.
— CNBC’s Gabrielle Fonrouge contributed to this report.
WATCH: Trump tariffs mean higher prices, big losses for Amazon sellers
Jeff Bezos, founder and executive chairman of Amazon and owner of The Washington Post, takes the stage during The New York Times’ annual DealBook Summit, at Jazz at Lincoln Center in New York City, Dec. 4, 2024.
Michael M. Santiago | Getty Images
Amazon founder Jeff Bezos plans to sell up to 25 million shares in the company over the next year, according to a financial filing on Friday.
Bezos, who stepped down as CEO in 2021 but remains Amazon’s top shareholder, is selling the shares as part of a trading plan adopted on March 4, the filing states. The stake would be worth about $4.8 billion at the current price.
The disclosure follows Amazon’s first-quarter earnings report late Thursday. While profit and revenue topped estimates, the company’s forecast for operating income in the current quarter came in below Wall Street’s expectations.
The results show that Amazon is bracing for uncertainty related to President Donald Trump’s sweeping new tariffs. The company landed in the crosshairs of the White House this week over a report that Amazon planned to show shoppers the cost of the tariffs. Trump personally called Bezos to complain, and Amazon clarified that no such change was coming.
Bezos previously offloaded about $13.5 billion worth of Amazon shares last year, marking his first sale of company stock since 2021.
Since handing over the Amazon CEO role to Andy Jassy, Bezos has spent more of his time on his space exploration company, Blue Origin, and his $10 billion climate and biodiversity fund. He’s used Amazon share sales to help fund Blue Origin, as well as the Day One Fund, which he launched in September 2018 to provide education in low-income communities and combat homelessness.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway