Microsoft AI CEO Mustafa Suleyman: Building AI Personality, OpenAI Relationship, Data Center Demand, AGI Timeline

26:43And she was just like, oh, you can just press this button. And I was like, oh, that's, that's kind of incredible. And I think that's just on the dictation side on the voice conversation side. I mean, we see much, much longer, much more interesting, much deeper conversations taking place when somebody phones co-pilot. It's super fast. It feels like you're having a real world conversation. You can interrupt it almost perfectly. And it's got real time information in the voice as well. So it's aware of like the latest sports result or the traffic in the area or the weather and stuff like that. And, you know, a lot of people use it in their car on the way home or on the way to work or when they're washing up and they're in a hands-free moment and they just have a question.

27:26It's kind of a weird thing because it sort of lowers the barrier to entry to getting an idea out of your head. You know, like everyone, weird things occur to us during the day. We're all like, oh, I wonder about this. I wonder about that. And then you go to kind of look it up on your phone, you search it or whatever. Whereas now I think that there is a modality that I'm increasingly seeing where people just turn to their AI and be like, hey, what was the answer to that thing? Or how does that work? And it might be a shorter interaction, could turn into a long conversation. But the modality is enabling a different type of conversation, a different type of thought to be expressed.

28:02So I think it's like a super interesting time like that. We're really just figuring it out as we go along. All right. So we're definitely seeing these new modalities come out. Voice, of course, we've obviously this, we're in the middle of a firestorm with images. Okay, I guess let me ask that previous question a little bit differently. Do you think that there are diminishing returns on pre-training right now, basically scaling up the biggest possible model and then building from there? You're shaking your head no. Specifically on pre-training, it's been a little slower than it was in the previous four orders of magnitude.

28:35but the same computation, the same flops or the units of calculation that go into turning data and compute into some insight into the model, that is just a different application of the compute. We're using compute at a different stage. We're either using it at post-training or we're using it at inference time where we generate lots of synthetic data to sample from. So net-net, we're still spending as much on computation. It's just that we're using it in a different part of the process. But for as far as everyone else should be concerned, aside from the technical details, we're definitely still seeing massive improvements in capabilities.

29:18And I think that's for sure going to continue. Okay, Mustafa, then can you help me understand some headlines I've been seeing about Microsoft? This is from Reuters. Probably not. I doubt it. Well, I'm going to ask anyway, and you tell me what you think. I mean, Reuters says Microsoft pulls back from more data center leases in the US and Europe. And it says Microsoft has abandoned data center projects to use two gigawatts of electricity in the US and Europe in the last six months due to an oversupply relative to its current demand. I mean, how does that make sense in context of what you just said, that you are still seeing results with scaling up?

29:55So it's funny, I actually did ask our finance guy who's responsible for all these contracts on Friday morning. And I was like, dude, I read this thing in the news, like what's going on? I could use the extra power for our training runs. And he pointed out that, in fact, we have optioned many, many different contracts, many of which we haven't even signed. So a lot of these are actually just explorations where we're in conversations. Nothing's been signed. Some of them where we've optioned, where we're taking it just to keep our options open. And we've actually made bets in other areas, other parts of the world.

30:32But I can tell you, we are still consuming at an unbelievable rate. I think that we've something like 32 or 34 gigawatts of renewable energy since 2020, we've contracted and consumed. So I think we're one of the largest buyers in the world. So I don't expect that to change anytime soon. So I guess the headlines that are saying that Microsoft pulled back, you would get those headlines unless you picked up every single one of your options. Is that what you're saying? That's right. That's right. Yeah. And in fact, many of them are not even options that we signed. They're just conversations that we were in with certain suppliers.

31:08Okay. I mean, I guess another explanation that we've heard is that because OpenAI is now working with others for data center capacity like Oracle, this was a sign that Microsoft basically had allocated data center capacity to OpenAI. It doesn't need as much anymore. Any truth to that? No. So, I mean, all of their inference comes through us. And so there's no slowdown in our relationship with them. We sell them as much as we want to offer them. And then if there's any extra demand that they have, particularly on the Oracle side, they go off and consume that. But there's really no slowdown from our perspective, at least.

31:50Okay, that is clarifying. So it's always good to have these conversations, throw the headlines out there and see what the truth is. Let's talk about your efforts. I mean, you're building your own models, but you've decided to not try to build, I guess, the biggest possible models. You're working on smaller models. I wanna ask you again, if there's gonna be endless value to endless scale, why not try to throw in with the big models, especially because others are building those big models with your aforementioned scale. Totally. I mean, you know, we have a lasting long-term relationship with OpenAI, which is amazing.

32:28They've been incredible partners to us and they'll continue to supply us with, you know, the best IP and models in the world for many years to come. So we can rely on them to do the absolute frontier. But I think what we always see in technology is that it always costs like 10x more to build the absolute frontier. And once that has been built, all of the engineers and developers find much more efficient ways to essentially build the same thing that's been out there, but six months later. And that's what we refer to as our kind of Pareto optimal strategy or off frontier. And we've actually seen it across the whole field over the last three years.

33:13I mean, there are folks who have trained models that perform as well as gpt3 that are a hundred times more inference efficient that cost an order of magnitude less to train and yet they can still deliver the same predictive capability so i expect that to happen for gpt4 gpt40 and and all of the other models down the road so you know we have our own internal team of developers um and you know world experts working on building our own mai models and uh very very proud of what they're doing. They're doing a great job. And you mentioned in terms of where this computer is going, that inference is going to be one of the places that it's going, which is basically when the model is answering versus training up the models.

33:55I want to ask you two questions about inference, and they're both related to reasoning. To build these new personalized products that you're building, how important is reasoning versus just a better model? And then in terms of compute that reasoning uses, is it true that reasoning uses 100 times more compute than training? Yeah, I mean, it's a good question. I mean, the exciting thing about reasoning models is that in a way, they've learned how to learn. They have a method, largely by looking at the logical structure of code and math and puzzles. They've sort of learned the abstract idea of logic.

34:38They can follow a path of reasoning in its most abstract way and then apply that to other settings, even if they don't obviously appear to be, you know, logical settings. So it could be like planning or booking or learning in some other setting. And that has turned out to be a very, very valuable skill. It's kind of like a meta skill or, you know, or in some sense, like a metacognition because it actually now can think out loud in its own head or, you know, talk about in its own mind what it's planning to do before it goes off and does it. And just taking a beat, you know, giving it a moment to think behind the scenes, it might take a few minutes or 10 minutes at most, allows it to like draw on other sources.

35:27So it can look up things on the web. It can sort of follow a path of logic down one path, realize that doesn't, you know, turn out in the best way possible, go back up the tree, try another path, and then produce an output. So it's a really fundamental part of the process. And yes, it definitely uses more computation. A hundred times more? But it generally produces better answers. What do you think a hundred times more is right? I mean, we're hearing that from Jensen. I mean, So I'm curious if that's your experience as somebody who's running these models. It definitely uses a lot more computation.

36:05But I think the interesting thing is that you're not going to need to use those models all the time. You obviously need a hard problem. You have to ask it a tough question that requires this kind of chain of thought thinking. And many answers don't require that. And actually, you often prefer something that is fast, efficient, succinct, and instantaneous. Okay, and now we had a debate here on the show, and I'm hoping you can weigh in on this one too. I'm just throwing you all of our debates and getting answers, which is awesome. We love doing this. In terms of like how companies are thinking through the amount of money they're spending on serving these products, and whether that can continue indefinitely.

36:48Let's just use this OpenAI image example. the image generator that they just released in ChatGPT, people are melting down their servers and they're creating anime images. But if you think about the economic activity generated by these images, it's quite low and it's quite expensive to serve. Or think about, for instance, me booking a ticket on, let's say, Kayak or Ticketmaster through Copilot instead of just going to Ticketmaster or Kayak on my own. It's a slightly better experience, but it's a very expensive experience to serve. And so those who say that this is coming to an end, this AI moment is coming to an end, basically say that this is all going to just be too expensive and not value add enough.

37:35We're going to be, you know, having chatbots book tickets, well, we can do it on the websites. We're going to be having image generators make us anime, which does nothing but give us maybe 10 seconds of giggling. Really good giggling, but 10 seconds of giggling. and then we move on. I mean, what do you think about that? Like it's clearly like the servers are being used, but are they being used in a valuable way enough to make companies like yours keep going and building? It is a fair question. At the same time, as we've seen over and over again in the history of technology, when something is useful, it gets cheaper and easier to use and it spreads far and wide.

38:15And that increased adoption, because it's cheaper, has a sort of recursive effect on price because the more people use it, the more demand there is. And then that then drives the cost of production down even more because of competition. And so I expect that to happen in this situation. I think it's actually really good news for our data centers as well. You know, Microsoft is long committed to being carbon net negative by 2030, to be clean water positive by 2030 and to be a zero waste company. they're massive amazing commitments and i think that's actually really exciting because we end up driving demand for the production of high quality renewable energy for our data centers and that then obviously reduces the price i think we've seen that with solar over the last 15 years which is like an unbelievable trajectory so um i think there's a lot of good news there even if as you say, you know, some of those use cases are just generating funny anime giggle pics, many of them will be doing very, very useful things in your life too.

39:21So, you know, there's always a bit of balance there. Yeah, I guess like Chris Dixon says, it can start as the next big thing will start as a game. And a lot of people laughed at these images and the way that they, you know, make you look like an anime character if you prompt them to do that. But I also saw Ethan Mollick from Morton, prompting it to make infographics, and it handles it perfectly. Right. Yeah, dude, I mean, like the intertubes would not be the intertubes without serious amount of cat memes, right? They make the world go round. Exactly. All right. I want to take a quick break and then come back and talk a little bit about your relationship with OpenAI, and then maybe get your prediction on when we're going to see artificial general intelligence.

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41:11You're used to hearing my voice on the world bringing you interviews from around the globe. And you hear me reporting environment and climate news. I'm Carolyn Buehler. And I'm Marco Werman. We're now with you hosting the world together. More global journalism with a fresh new sound. Listen to the world on your local public radio station and wherever you find your podcasts.

41:39And we're back here on Big Technology Podcast with Mustafa Suleiman. He is the CEO of Microsoft AI. And one of Microsoft AI's big partners is OpenAI. And I just can't help but think about where this partnership is going, because we talked a little bit in the beginning about the assistant that you want to build, something that knows your context, has memory of you, something that can help you get tasks done in the real world. well, OpenAI wants to build that exact same thing. And so I'm curious, I mean, you guys have a deal, right, where they use your technology, and they're supposed to feed some of their breakthroughs back to Microsoft.

42:20But at a certain point, why does it make sense for them to keep doing that if you're trying to build the same thing? Look, I mean, first of all, it's worth saying that this partnership started way back in 2019, when Microsoft had the foresight to put a billion dollars into a not-for-profit research lab, I think that's going to turn out to be one of the most impactful, most successful investments and partnerships of all time in technology. And despite all the ups and downs, we actually have an amazing relationship with them. If you think about the fact that they are a rocket ship that has grown faster than any other technology company in living memory, delivered a product that people absolutely love, consistently delivered amazing research technology, you know, the first thing you have to do is take your hat off to them and give them maximum respect for that.

43:07At the same time, they're also still a startup and, you know, they're busy sort of trying to figure out their, you know, product portfolio and their priorities. And, you know, whilst we have an incredibly deep partnership with them, which is going to last way through 2030 and beyond, they also have their priorities, we have our priorities. And that's just the nature of those partnerships. They change over time, right? And as they're growing bigger and bigger, they have different priorities. And likewise, we're doing exactly the same. So I'm pretty confident that this is going to continue to be brilliant for both sides as it has been over the last five years.

43:44Okay, you said the partnership's going to last till 2030, but not if they declare that they've reached AGI. So what happens when they do that? You know, AGI is a very uncertain definition, right? Is it your definition or their definition that releases them from the contract, though? You know, it's an interesting way to look at the world. You know, you think about it like this. If we really are on the cusp of producing something that is more valuable than all economically productive work that any human can produce, I think one of the last things we're going to be worried about is our partnership with OpenAI.

44:21It's going to profoundly change humanity. I think national governments will be very concerned and interested in how that plays out. And, you know, it's just going to change what it means to be human. So I personally think that we're still a little way off from that. I find it hard to judge. It doesn't instinctively feel to me like we're two to three years away. I know some people think that it is, and I respect them deeply. Like a lot of smart people can disagree on stuff like that. I feel like we're still a good decade or so away. And when a scientist or a technologist, an entrepreneur like me says we're a decade away, that's just a hand wavy way of saying we're not really sure and it feels pretty far off.

45:00So, you know, but that's the best answer I can give. It doesn't feel like it's imminent. And, you know, in the meantime, we're doing everything that we possibly can to build great products day to day. Okay. One more thing about OpenAI. Microsoft today, we're talking on Friday, so earlier this week, is part of this$40 billion fundraising into OpenAI. OpenAI set the record for the largest VC round ever last year,$6.6 billion. This is$40 billion. SoftBank's going to put$30 billion in. Microsoft is part of the$10 billion remaining. What do you get for the money? I think it's awesome. I mean, look, the more OpenAI are successful, the more we are successful.

45:44Like we will end up being one of the largest shareholders in the company. We have an amazing technology license from them. They, you know, use our infrastructure and our technology in terms of our Azure compute infrastructure and so on. So it's a great partnership. And, you know, in a partnership, we want to see them do the best that they can. That's why we participate in the round. Okay. And all right. So let's talk a little bit about the future of this technology. I guess you already said you think I was going to ask you when you think AGI is coming you think decades away that would actually make you less optimistic than most of your counterparts Demis is saying three to five years I mean people everywhere I don't know you might not think it's coming we tend to think here and we're probably less informed than you are that OpenAI might say it next year and so we'll have to play this back if that happens no I didn't say decades plural I said a decade A decade.

46:40A decade. You know, but look, I think the truth is it's hard to judge. Like, could I imagine it happening within five years? Yeah, absolutely. It is possible. The rate of progress over the last three or four years has been electric. It's kind of unlike any other, you know, explosion of technology we've ever seen. The rate of progress is insane. Open source is on fire. They're doing incredible things. And every lab is, you know, every big company lab is investing everything that they've got in trying to make this possible. So, yeah, I could certainly see a scenario where it's closer to five years.

47:13I'm just saying, you know, instinctively to me, it feels like there's still a lot of basics that we've got to get right. You know, we still have to nail hallucinations. We still have to nail those citations I mentioned. It's still not great at instruction following. It still doesn't quite do memory. It still doesn't personalize to every individual. But, you know, we're seeing the glimmers of it doing all of those things. So I think that we're taking steady steps on the way there. Now, you were at Google for a while. you mentioned you worked on Lambda. I'm curious what you think happens. We don't even need to reach AGI for this question to come into play.

47:48What happens to search as we start to speak more with products like yours? You've mentioned in the past that you think search is horribly broken or I'm channeling your words, but something along that line. So what happens? I honestly think it's kind of amazing that we still all use search. It does feel like, you know, using a yellow pages or an A to Z back in the day, right? it you know i think it's going to fundamentally change i think instead of browsing 10 blue links you're just going to ask your ai it's going to give you a super succinct answer show you images maps videos all in the feed you're going to give feedback and be like oh that's a bit strange i prefer it a bit more like that or what does that look like or what about this and it's just going to dynamically regenerate for you on the spot um so how does that change the business model well well, I still think ads are going to play an enormous part of it.

48:38Hopefully those ads are higher quality, more personalized, more useful. There's nothing wrong with ads. We want them to be helpful to us. Like I'm happy when I buy something that I found from an advert because it's what I really, really want, but I'm not happy when I feel like I'm getting spammed with low quality ads. And so that's the balancing act that we've got to strike is to try and find ways to introduce ads into the, you know, the co-pilot experience in a way that's actually subtle and is really helpful to you. Yeah. And that's really hard because let's say this is your best butter and it's your inner circle of the five people you call when you're running out of ideas at Home Depot for it to then say, you know, I really appreciate you and I'm going to help you out here.

49:21But by the way, do you know there's a different side of glue that you might be interested in, the finessing on that must be quite difficult. So we are running out of time. I just want to ask you one question about jobs because you're also pretty strident about the possibility that we might have some serious change here come to our work. And you had said that AI is going to create a serious number of losers in white collar work. Maybe it already is. I've sort of changed my tuned and thinking that, you know, we're all fine in the white collar work world and now thinking, well, it's anyone's guess.

49:57So what's coming, Mustafa? I do think that that is the big story that we should be talking about. That's the transition that's going to happen over the next 15 years, is that it is going to be a cheap and basically abundant resource to have these reasoning models that can take action in your workplace, that can orchestrate your apps and get things done for you on your desktop. Like that really is quite a profound shift in how we work today. And I do think that like the your day to day workflow just isn't going to look like this in 10 or 15 years time, it's going to be much more about you managing your AI agent, you asking it to go do things checking in on its quality, getting feedback, and getting into this like symbiotic relationship where you iterate with it and you create with it and solve with it, that's going to be massively more efficient.

50:51And I do think it's going to make everybody a lot more creative and productive. I mean, after all, it is intelligence that has produced everything that is of value in our human civilization. Like everything around us is a product of smart human beings getting together, organizing, creating, inventing, and producing everything that you see in your, you know, line of sight at this very moment. And we're now about to make that very same technique, those set of capabilities, really cheap, if not like zero marginal cost. And so, you know, I think everyone gets a little bit caught up on the week to week, day to day, or definitions of these abstract ideas, just focus on the capabilities, you know, it should really be thinking about these things as artificial capable intelligence, what can it do in practice?

51:39And what is the value of that doing? I prefer that as a framing versus AGI because it's sort of more measurable. And we can actually look at it very, very explicitly in terms of its economic impact and its impact on work. I mean, you could argue that that's already here. And so just to sort of ask you one follow up on that one. What would you tell young people to do today? Because I'm thinking customer service, probably not software engineering. I don't know. I just wrote a story saying, you know, they can start to do the work of journalists. I mean, you've just released podcasts five minutes ago.

52:14So what should young people do when they're thinking about a career? I'm like saying, what should young people do when they get access to the internet for the first time? Like part of it is sort of obvious where it's like, use it, experiment, try stuff out, do crazy things, make mistakes, get it wrong. And, you know, part of it is like, well, I actually don't really know until people get a chance to really play with it. As we've seen over and over in the history of technology, you know, the things that people choose to do with their phones, with Internet, with their laptops, you know, with the tools that they have are always like mind blowing.

52:51They're always way more inventive and surprising than anything you could possibly think of ahead of time. And so then as you start to see people use it in a certain way, then, you know, as designers and creators of technology, we adapt what we put out there and try to make it more useful to those people. So I think the same applies to a 15 year old who's, you know, a high school thinking about what they do next in college or whatever, or whether or not they go to college. And I think the answer is, play with these things, try them out, keep an open mind, try everything that you possibly can with these models.

53:24And then you'll start to see their weaknesses as well, by the way, and you'll start to chip away at the hype that I give because I'm super excited about it. I'm obviously a super optimistic, you know, techno person, but you'll see where it doesn't work. and you'll see its edges and where it makes mistakes and stuff like that. And I think that will give people a lot more concrete reassurance as to what trajectory of improvement we're on. All right, I just want to ask one last question just to wrap up everything we've talked about today. It's kind of an offbeat question, but I am curious, now that you're talking about how these bots are going to differentiate themselves based off of personality, we are going to have advertising in them, but they might intermediate your interactions with other companies.

54:02What happens to brand in this new era? I think brand is actually more important than ever in a way, because there's sort of two modes of trust. There's trust based on utility, where it's functionally correct. It's, you know, factually accurate. It does the thing that you've intended it to do, and therefore you trust it to do the same thing again. But then there's also a kind of emotional trust where you trust it because it is polite and respectful, because it's funny, because it's familiar, you know, and that's really where brands come in, you know, trusted brands that are able to repeatedly deliver a reassuring message.

54:39I think people are going to appreciate that more than ever before. Good stuff. Mustafa, this is the first interview we've done with a Microsoft AI executive. I hope not the last anyone who's listening on the Microsoft team. Let's do this again. And Mustafa, I'm just so grateful to have your time today. Thank you so much for coming on the show. Thanks a lot. It's been really fun. Really, really cool questions. Thank you. Awesome stuff. Well, thank you, everybody, for listening. And we'll see you next time on Big Technology Podcast.