Report: Microsoft working on a smaller and cheaper AI model than OpenAI's

A robotic arm with Microsoft written over it

Microsoft is expanding its internal focus on developing artificial intelligence (AI) technology that requires less computing power and financial resources. The company has formed a new team dedicated to building what it calls "smaller language models," or SLMs, according to a recent report from The Information.

These SLMs aim to provide conversational and generative capabilities similar to large language models (LLM) like OpenAI's GPT but with significantly reduced hardware needs. This would allow Microsoft's AI products and services to have lower associated costs and carbon footprint compared to alternatives developed externally.

The GenAI team, expected to be incorporated into Microsoft's Azure cloud unit, will focus on creating smaller language models. To support the GenAI team, Microsoft has also relocated several top developers from its research group. Microsoft corporate vice president Misha Bilenko will spearhead the team's efforts.

The GenAI team aims to create AI that matches or exceeds the functionality of models sourced from companies like OpenAI while optimizing for smaller sizes.

To date, Microsoft has incorporated a number of AI capabilities from OpenAI into its offerings. For example, Bing uses GPT-4 for Copilot, and Bing Image Creator uses Dall-E for image generation. In recent weeks, the company also unveiled Copilot Pro—a subscription service targeting individual consumers to give them more advanced AI capabilities.

The report comes after OpenAI's recent launch of the GPT Store, where users can create, share, and sell customized AI models based on OpenAI's language models. Similarly, Microsoft announced its own plans to offer custom AI chatbots tailored to specific needs and topics for Copilot.

However, relying on externally developed AI comes with some fees and a lack of control over the technology itself. Microsoft's pursuit of developing smaller and more affordable AI technology could potentially open up new avenues for the company to offer its own solutions, reducing dependence on third-party providers.

In case you missed it, the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) are said to want to investigate the OpenAI and Microsoft relationship. Last week, we reported that both agencies are eager to investigate the deal, notably Microsoft's involvement and its impact on competition in the AI industry.