Javed Sayed and
Bodhisatva Ganguli, the Hyderabad-born chief executive of the $198 billion US-based technology behemoth said “the next big wave” will be Artificial Intelligence and that he was excited by AR-VR (Artificial and Virtual Reality) and the Metaverse.
Microsoft-backed popular Open AI platform ChatGPT will also be integrated with several of its products including search engine Bing, he said. Nadella also spoke about the future of technology companies in a de-globalised world and how Microsoft was planning to ride through the economic uncertainty. Edited Excerpts:
What will fuel the Microsoft of the future?
I focus on two things: core sense of purpose and mission of the company – because ultimately technologies will come and go. Microsoft had an identity of being a tech platform so that others can create more tech platforms. That was an opportunity in 1975. I think it’s more of an opportunity in 2023, so I just want to stay grounded on that. I have always said that the next big wave is going to be AI (Artificial Intelligence). I’m still very excited about what’s happening with AR-VR (artificial reality – virtual reality) and Metaverse, because the creation of a sense of presence is important.
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Ultimately, I want to translate into something like computational chemistry, which we need desperately for our energy transition. But the foundation, if I look at all those three, they build on the cloud. If I look at what’s happening in AI today, these large foundational models that we are talking about and are very excited about, were only possible because of the cloud and what we did in terms of very differentiated work in Azure to be able to model and train these large models. Today’s technology, sometimes used well and in innovative ways, helps (give) birth (to) the technology of the future.
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What role can India play in AI, quantum computing and the Metaverse?
My sense of optimism for India comes in multiple ways. What’s happening with India and digital public goods is nothing other than astonishing. I mean, nowhere else do I see such rigorous effort being put. I met with the people behind Bhashini. They showed me how they are converting speech to text and text to speech. In fact, they have used ChatGPT on the government documents and showed me some unbelievable capability.
Small businesses are using technology to grow, like Senco Gold in Kolkata, or large banks like the State Bank of India. The Tatas, the (Reliance) Jios and Adanis and everyone else are all creating technology. And let’s not forget the startups. Whether it is InMobi or LambdaTest or Udaan, they are all demonstrating intense usage that I have not seen before. As a percentage of GDP growth in India, technology usage is very high. Already on GitHub, the number two country is India. On LinkedIn, the rate of essentially skill profiling in India is twice the global rate. So, that shows the other aspirational side.
Can you give us a sense of Microsoft’s cumulative investment in India?
It is significant. There are three ways I measure Microsoft investment in India. One is whether we are making (technology products) in India. Historically, we built products elsewhere, and we sold them here, whereas now we make products here. We have the largest development centre outside of the United States.
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We have put significant capital investments in building out four large data centres and we have even partnered with Jio, building out their own data centre. So, we are making significant capital investment in building out essentially the modern-day factories called data centres. So that’s us making (in) India, which is leading to all the others making in India. But those companies that are making in India are not just making in India, they’re making for the world. We work with LambdaTest or InMobi to take them everywhere else.
Microsoft-backed ChatGPT has become hugely popular. How do we see you building products on top of these AI offerings? Is an integration with Bing in the offing? Does it put you in direct competition with Google?
I like it when $10 billion-plus businesses in Microsoft, like Bing, are sort of considered somehow non-existent. So, it’s a good position to be in, because you can surprise the world. We’re very excited about our partnership with Open AI. It’s the most successful, most real use of large models in some real-world scenarios. We partnered with Open AI to bring that to life. So, when Andrej Karpathy tweets, saying that 80% of his code is now being written by an AI like co-pilot, it’s phenomenal. You will (soon) see us do more with it across all domains. Today, it’s available as Azure open APIs. We’ll keep expanding that because we want to make sure that these are large models that are available for every developer.
The fact that Bhashini can use GPT, that to me is as big as anything else. I want to make sure that we use it to change what happens in customer service with Dynamics in contact centres; what happens with Nuance where we have DAX today as an AI product that just completely changes the physician’s works; what’s happening with Office 365 and Microsoft 365. And how Microsoft Designer today uses DALL-E to help people create designs. In Power Apps you can prompt workflow automation. So, yes, we look forward to sort of seeing what’s possible in every domain, including Bing.
How do technology companies function in a world order where the amount and degree of globalization seems to be decreasing?
There is no question that the world is going through a new phase of figuring out what configuration of globalization works for them. I think that we as companies have to navigate what is clearly a more complicated geopolitical world. But ultimately, I want to stay focused on – how are we helping? Our license to operate in any country fundamentally exists because we create local surplus, right? I mean, take Ukraine. With Ukraine, we have a very simple principle that when anybody is being attacked on the cyber domain, we help to defend. And in the case of Ukraine, we were right there and said, “how do we help the government of Ukraine continue to function when they are under attack?”
So, to me, we want to meet the real world. We are an American company, subject to American foreign policy, but we ultimately will be tested in India (or the country we are operating in). How we are able to create local surplus, and if we do, we will have a permission to operate and if we don’t, we will get kicked out and deservedly so. So that’s the way I think about every country. As long as we do that, I think multinationals like us will stay grounded.
Is the plan to buy TikTok dead?
I am very focused on Activision Blizzard and completing that transaction.
You said technology is a deflationary force in an inflationary world. What is your outlook for 2023? Do you think things will get worse?
I’m not a macro economist, but the fundamental point I was making there was – it’s sort of showtime for all of us in digital technology. To be able to say – look, here is how you can use the most valuable resource to do more with less. Therefore, fundamentally… move to the cloud. When you move to the cloud, you use less energy, that’s deflation. You use it more efficiently, that’s deflationary.
In fact, if you write a cloud-native app that might be 100x, sometimes better than what you may have done in your data centre. So, those are all deflationary forces that are available for people to exercise in a time of crisis. We are, like every other company, going to be subject to what the world GDP growth looks like. We’re not immune to it. And we will have to adjust. I made the commitment that our operating costs are going to be in line with our revenue growth. Therefore, we will make sure we are investing in a disciplined way for the future, and we stay grounded in the fact that we need to be competitive.
Meta and Google have significant partnerships with Reliance. Do you plan to partner with more Indian conglomerates across some large areas like data centres or other segments?
We are partnered with everybody. Jio has an Azure Jio region. So, they’re investing significantly in our cloud. We’ve partnered with Adani. We just recently announced that they’re going to be using Azure as their partner for all their infrastructure. They’re also partnered with us in building out our data centre in Hyderabad. We are partnered with Tatas. Tata Digital is built completely on Azure, and we’re really excited about their Super App and the progress they’re making. So, the large conglomerates in India are all people that we want to make sure we co-innovate with.
The difference between us and many of our multinational competitors is that our business model requires others to use our output to create more valuable output for themselves. So, it’s not creating dependence on us, but it’s about creating independence with us. That’s our strategy and we’ll stay focused on it.
Will you prefer to look for a strategic partner in India?
I think when you are a company like Microsoft, I want to make sure that our technology gets used across the board. Anything that is going to help us reach every Indian citizen across every Indian organization on any given day is our preferred partner. I always wonder how many people are employed in the India partner channel around our technologies. Microsoft is unique.
We learn from others who came before us, but I feel no one asks the question: how many people have built businesses around this company that are successful? Having one exclusive preferred partner that we bought off for some distribution, that is not strategic for India. What is strategic is to evaluate who is investing in India to help India grow.
What role will India play in the technology of the future, especially in AI, Metaverse and quantum computing?
The first thing is that there’s a study (by) this Dartmouth professor called Diego Comin. He did a fantastic longitudinal study of diffusion of technology from the 1700s to, I think, he has updated it to 2020. The fundamental thing that he talks about is that you should take the latest and greatest technology and make sure that the diffusion rate of that technology inside of your country is very high. So, get it in and don’t use it trivially. Use it intensely to create more value-added output.
Technology’s use in small businesses, public sector, large existing MNCs and unicorns. That’s what is important. To do that, you need human capital, but that’s where India already has an advantage. You take my two data points or two of the three data points of Github and LinkedIn and you add that up and say – ‘oh, wow, we already have the human capital that already knows about all this technology and has the aspiration’. This technology is coming and let us apply it not just in five unicorns but apply it in a public sector Navaratna. Let’s apply it in a government, in a small business. That, to me, is what I think India should be doing and is doing.