| Microsoft's flagship developer conference kicks off this afternoon, and artificial intelligence is expected to be a big part of the agenda. Austin Carr writes today about an unusual marketing decision the company has made, given its relationship with ChatGPT pioneer OpenAI. Plus: How Apple AI went wrong, and what executives listen to on their commutes. If this email was forwarded to you, click here to sign up. If you use any of Microsoft Corp.'s ubiquitous apps—Teams, Outlook, Excel, etc.—or own a Windows laptop, you've probably noticed the company's artificial intelligence features showing up, well, everywhere. What you're not likely to see is any mention of OpenAI, despite Microsoft having invested $13.75 billion into the ChatGPT maker. For Bloomberg Businessweek's feature on Microsoft's AI efforts, published last week, my colleague Dina Bass and I explored its complicated, frenemy relationship with OpenAI. As part of the deal Chief Executive Officer Satya Nadella struck, Microsoft gets exclusive access to the models driving ChatGPT, for integration into its services like Word and Windows. Yet you'd never really know that from using many of Microsoft's apps. The reason, we learned, is as much a technical strategy as it is a marketing decision. Microsoft's in-house equivalent of ChatGPT is called Copilot. The AI companion usually manifests as a chatbot attached as a sidebar to its productivity suite. Click the Copilot button in PowerPoint, for instance, and you can ask it to draft a slideshow based on your text prompts or request template adjustments. But you'll have no idea if an OpenAI model is powering those actions.  A Microsoft Copilot+ PC on display at a Best Buy store in Pinole, California. Photographer: David Paul Morris/Bloomberg Charles Lamanna, who oversees Copilot's platform for building custom agents, told us that Microsoft was "very careful not to burn in the model into the experience in Copilot." By contrast, if you're using ChatGPT, you'll see a drop-down menu for selecting models with confusing names such as "GPT-4.5" and "o4-mini-high," each with different specialties, be they for performing basic tasks, complex analysis or coding. Google and Anthropic PBC have taken a similar approach, promoting models with gobbledygook names like "2.5 Flash (preview)" and "Claude 3.7 Sonnet," respectively. But, Lamanna said, "If you use Copilot, look for the model picker: There is none. You don't choose the model. We have been and will continue to substitute and swap different models based on different scenarios we think work out best." Put another way, Microsoft invisibly automates what model is responding, based on the context of the request. Ask it an existential philosophy question, and it might route you to OpenAI's latest reasoning model. Ask for help on an algebra quiz, and it might gear you to a homegrown Microsoft model specializing in math or, possibly in the future, an open-source model from DeepSeek or Meta Platforms that can handle the request more efficiently. "There probably will be a bouquet of different models to enable a lot of these core scenarios," Lamanna says. "That's kind of our bet." Although OpenAI's cutting-edge models will power a lot of those core experiences, Microsoft really only cares to promote Copilot. It's a funny choice given its blockbuster AI investment and marketing history. After all, this is a company that once cross-promoted Xbox 360 and Windows 7 Media Center by touting how they worked seamlessly with Netflix. It created an ad featuring electro-funk band Chromeo to hype a Facebook social integration with Bing search. And, of course, Windows PCs throughout the 1990s heavily promoted that they had "Intel Inside." Not so with OpenAI. Microsoft refers to its slate of AI-centric Windows computers as "Copilot+ PCs," not "ChatGPT+ PCs." That's partly because Copilot awkwardly competes with ChatGPT, and partly because Microsoft thinks its mainstream customers simply don't care about such distinctions. Judson Althoff, Microsoft's chief sales officer, told us few car buyers really care about what engine is hiding under the hood. "Is it a four-cylinder turbo? An eight-cylinder?" he said. "How much the whole package costs is what they care about." Yet Microsoft essentially spent billions of dollars sourcing the highest-end car engine out there, only to pretend it built its own vehicle from scratch. (At least in the eyes of your average customer—Microsoft is happy to play up its OpenAI partnership to shareholders and sophisticated developers, of course.) Personally, I'm not so sure that normies are agnostic about the motor powering their car. A lot of people care about how fast their ride is, if not its reliability or fuel efficiency. If more folks realized Copilot was often driven by the same Ferrari engine as ChatGPT, then perhaps it wouldn't feel so much like driving a generic Toyota to the office. |
