Microsoft hiring of Inflection staff came amid lack of consumer AI vision, and board concerns about OpenAI, insiders say
REUTERS/Eduardo Munoz
- Microsoft hired a team from Inflection AI to boost its consumer AI strategy.
- Insiders say the move came amid concern from Microsoft’s board about instability at OpenAI.
- The company’s consumer AI strategy also needed a boost and a more visionary leader, insiders said.
Microsoft‘s hiring spree from startup Inflection AI came amid concerns from the software giant’s board about instability at OpenAI and internal doubts about consumer AI vision and strategy, according to insiders.
The big tech company on Tuesday said Inflection CEO Mustafa Suleyman and cofounder Karén Simonyan are forming a new Microsoft AI organization, along with several members of the Inflection team.
Suleyman, who cofounded AI pioneer DeepMind, will be CEO of Microsoft AI. Simonyan will be chief scientist of the group, which will be responsible for consumer AI products such as Microsoft’s Copilot AI chatbot and the Bing search engine.
Microsoft’s consumer AI vision needed boost
Some Microsoft insiders told BI that the company’s consumer AI strategy needed a boost and more of a visionary leader. The current and former employees who spoke to BI for this story asked not to be identified to protect their careers.
With OpenAI’s help, Microsoft has been trying to challenge Google’s dominance in online search. So far, they have made little progress.
Suleyman spent many years at Google, which acquired DeepMind back in 2014. He’s outspoken about AI chatbots and the future of search engines. In May, he predicted that the internet as we know it will fundamentally change and “old school” search will be gone in a decade.
As the new CEO of Microsoft AI, Suleyman’s purview will include thousands of employees who report to Mikhail Parakhin. Parakhin and his teams used to be part of Microsoft’s Experiences and Devices organization under Rajesh Jha.
Parakhin’s teams needed a more dedicated focus, and Jha is not considered to have the consumer vision that these teams required, two Microsoft insiders told BI.
Jha will continue to run huge and important products including Microsoft 365, Devices, and the Team work chat service. He’ll work closely with Suleyman, according to the company.
Parakhin has played a significant role in Microsoft’s AI work and is generally respected within the company for his technical prowess. He “fell out of favor” with OpenAI because he wanted the startup to essentially become Bing’s research and development team, a person familiar with their relationship said.
Microsoft spokesman Frank Shaw said Jha has a strong track record at Microsoft and Suleyman’s focus with be on consumer AI.
While Suleyman is generally known for the kind of vision Microsoft wants, some employees who spoke to BI said they were wary of Suleyman’s hiring. Google investigated Suleyman after internal complaints to human resources and executives about his behavior, BI reported in 2021. In a statement through his personal lawyers at the time, Suleyman said he apologized “unequivocally” to those affected. Shaw said he was aware of the concerns.
Board concerns about OpenAI
Microsoft has appeared to distance itself from OpenAI since November, when its CEO Sam Altman was ousted and later rehired. The November coup has been a source of concern for Microsoft’s board.
One person familiar with this situation said Microsoft CEO Satya Nadella has been under pressure from the board to hedge its AI bets over instability at OpenAI.
Shaw, Microsoft’s spokesman, confirmed that the board was concerned about the November drama at OpenAI. However, he said that Nadella has not been under pressure from the board over this situation. OpenAI didn’t respond to a request for comment.
Either way, Microsoft executives have been highlighting moves away from OpenAI in recent months.
In December, at the Microsoft annual meeting, executives assured shareholders that the company has many irons in the fire when it comes to AI, not just OpenAI. Nadella described this as a “big tent approach,” and CFO Amy Hood said Microsoft is “working with lots of other companies and partners in the AI space.”
Since then, Microsoft has added more AI models from different providers to its AI platform. It’s also continued work on some of its own models.
Some Microsoft insiders see the Inflection hires as another sign of the company diversifying its AI bets, focusing more on its own AI models, and relying less on OpenAI when it comes to consumer-focused efforts.
“OpenAI is simply not going to be our focus,” one Microsoft executive told BI. “Model development is going to pick up steam.”
Inflection also said on Tuesday that its Inflection 2.5 AI model will be offered through Azure. Insiders said the model will become part of Microsoft’s “model-as-a-service” platform alongside 1,600 models from providers such as Meta’s Llama and startup Mistral.
Shaw, Microsoft’s spokesman, said Suleyman’s hiring doesn’t move the company away from OpenAI. He stressed that the relationship between the two companies remains unchanged.
Nadella reiterated this, too, in a memo to Microsoft employees that was posted online. “Our AI innovation continues to build on our most strategic and important partnership with OpenAI,” Nadella wrote.
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