Microsoft's office building in Munich, Germany, shot from the outside.
PHOTO: gguy

Editor's note: UPDATE: This piece was updated Monday, Jan. 23, to include the official announcement of Microsoft's multi-billion-dollar investment in OpenAI.

Microsoft's announcement today that it will cut 10,000 jobs, or about 5% of its workforce, tempered news on a potential $10 billion investment in OpenAI's ChatGPT and its Azure-ChatGPT integrations released two days before the layoffs became public. 

Satya Nadella, Microsoft CEO, said in a Jan. 18 blog post announcing the workforce reductions that while customers accelerated their digital spend during the pandemic, his company now sees those same companies "optimize their digital spend to do more with less."

"We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one," Nadella added. "At the same time, the next major wave of computing is being born with advances in AI, as we’re turning the world’s most advanced models into a new computing platform."

Microsoft is the latest tech company to announce layoffs with Salesforce, Amazon and Meta representing just a few of many others. A report from Challenger, Gray & Christmas said tech layoffs are up 649% in 2022 vs. the prior year, compared to a 13% increase in layoffs from the economy in general.

Are Microsoft's layoffs related to its AI investment? Some are speculating:

About That Microsoft-OpenAI Integration 

About that OpenAI investment ...

Talk about Microsoft continuing its investment in OpenAI, the maker of the wildly popular ChatGPT generative artificial intelligence search query chatbot, became real this week when Microsoft on Monday announced the general availability of Azure OpenAI Service. Reports also say Microsoft will invest $10 billion in OpenAI, which would value the AI startup at $29 billion.

Eric Boyd, corporate VP of AI Platform for Azure Microsoft, said in the blog post Microsoft will provide increased public access to advanced AI models including GPT-3.5, Codex, DALL-E 2 — and eventually ChatGPT, which could position Microsoft to challenge Google as the search engine of choice.

Since OpenAI debuted its natural language processing (NLP) model ChatGPT on Nov. 30, users flocked to test out the AI chatbot that answers questions, admits mistakes and composes articles. Within five days the program had more than 1 million users. And now, it seems, ChatGPT is becoming the spot for business users and consumers to search for information and answers, such as with customer experience asks.

“The general availability of Azure OpenAI Service is not only an important milestone for our customers but also for Azure,” Boyd said. “Azure OpenAI Service provides businesses and developers with high-performance AI models at production scale with industry-leading uptime.”

Jan. 23 Update: Microsoft Officially Invests Billions in OpenAI

OpenAI in a blog post Monday, Jan. 23 announced officially what many have speculated: a multi-year, multi-billion dollar investment from Microsoft. It did not specify the specific details of that investment.

OpenAI officials said the investment will "allow us to continue our independent research and develop AI that is increasingly safe, useful, and powerful." The company is still remaining as a "capped-profit company" governed by the OpenAI nonprofit but will now be able to "raise the capital we need to fulfill our mission without sacrificing our core beliefs about broadly sharing benefits and the need to prioritize safety."

OpenAI is all-in on Azure. OpenAI's multiple supercomputing systems are powered by Azure, which OpenAI uses to train all of its models. "Microsoft will increase their investment in these systems to accelerate our independent research and Azure will remain the exclusive cloud provider for all OpenAI workloads across our research, API and products," OpenAI officials wrote.

Tale of Two Takes on Microsoft and ChatGPT

Following Monday’s announcement, many people took to social media in support of the move with sentiments including “This is amazing news” and “Love this” shared to Boyd’s LinkedIn page.

But some were not as convinced. Taking to Twitter, Eli Schwartz, the author of Product Led SEO, said he's not convinced a stake in OpenAI will be enough to take on Google.

Still, Microsoft is certainly all-in with OpenAI.

In October, Microsoft announced that OpenAI’s image-generation platform, DALL∙E 2, would be available to select clientele through an integration with Microsoft’s Azure OpenAI Service. Last week, speculation swirled over reports that Microsoft was preparing to incorporate ChatGPT into its Bing search engine — as news outlets reported on Microsoft’s potential investment of $10 Billion investment in OpenAI. 

During the 2023 World Economic Forum on Tuesday, Nadella spoke about his company’s partnership with OpenAI.

“The way Microsoft is going to really commercialize all of this is Azure has become the place for anybody and everybody who thinks about AI and large-scale training, and we're way ahead on that, and we continue to plan to sort of really step it up there,” Nadella said. “Second is we want to make these foundational models available as platforms. So, that means anybody who wants to build on them, in any domain, can build on top of soon. In fact, today, we just made the Azure OpenAI service available generally and then even ChatGPT will be available as an API — and so we're really excited about that and then we will incorporate this in our own application ... and every product of Microsoft will have some of the same AI capabilities to completely transform the product.”