News Analysis
Reports surfaced at the end of June that OpenAI was planning to use ChatGPT to create a “personalized assistant for work."
The Information first reported the story, stating that according to unnamed sources, Sam Altman had privately told investors he intended to turn ChatGPT into a “supersmart personal assistant for work.”
If true, OpenAI would be entering a rapidly growing market for AI assistants, many of which are based on OpenAI's own large language model (LLM).
One case in point: Microsoft. Microsoft has invested billions of dollars into OpenAI, to the point where it now owns 49% of the company according to the Information. Since the start of the year, Microsoft has been developing and releasing a series of workplace products, including Copilot, based on OpenAI's technology.
All of which raises the question: If OpenAI develops its own workplace assistant, will it place it in direct competition with its principal backer?
Microsoft's Place in the Productivity Space
"In a word, yes,” said Rich Wood, vice president of Microsoft partnerships at Rightpoint. "However Microsoft under Satya Nadella’s leadership has proven to be extremely open to collaboration and partnership, even with erstwhile competitors like Salesforce. In many ways, I suspect Microsoft would welcome a competitive entry into the productivity marketplace from OpenAI.” In his view, a competitive entry from OpenAI would spur additional innovation and force Microsoft to make its own product better and faster.
Enterprise productivity is a core business for Microsoft, he continued, and rather than feeling it has a right to win in that space, it sees it as its to defend — something it has done a phenomenal job of over the years.
“What makes this case unique is that Microsoft already has a stake in the would-be competitors, so no matter how it goes, they’re winning, and of course so are their enterprise customers,” he said.
This particular use of generative AI lands it in the middle of one of Microsoft’s core business lines: worker productivity.
AI assistants, he added, are a major innovation, but if you consider them in the context of a digital employee experience, it is clear how essential getting this right has already become at Microsoft.
“One common thread of the last dozen years in tech is that Redmond simply refuses to lose when it comes to worker productivity,” he concluded. “I do not think OpenAI bringing a product to market will change that; I think it forces Microsoft to be even better."
Related Article: Your Microsoft Copilot Prep List
Different Products, Different Target Audiences
OpenAI’s proposed "personalized assistant for work" and Microsoft's AI "copilots" are distinct products serving different purposes, which allows for their coexistence within the market, said Nucleus Research analyst Samuel Hamway.
If it comes to fruition, the OpenAI assistant will be a versatile tool across various business contexts. It would lack business specificity, instead acting as a generalized drafting and summarization tool, he told Reworked. In contrast, Microsoft Copilot offers more specialized tools that are tightly woven into Microsoft's existing products and platforms.
“This specificity is not a limitation but a unique strength, as it enables businesses that already rely on Microsoft's platforms to extract even more value from them,” he said.
Hamway cited the example of Microsoft Office. Businesses that use Microsoft Office Suite can integrate these "copilots" to improve efficiency, enhance productivity, and gain more in-depth insights, all within the familiar and trusted Microsoft ecosystem.
These copilots, he noted, are designed to be domain-specific, providing tailored AI solutions that speak directly to the nuances of specific industries or business processes.
Related Article: Generative AI, The Great Productivity Booster?
Microsoft's Market Strategy
The competition already exists between OpenAI and Microsoft, said Adaptavist Group CIO Neal Riley. Microsoft’s investment in OpenAI is a partnership, not a controlling relationship. Some teams inside Microsoft already actively compete against the stated aims of OpenAI (for example, producing the Orca open source LLM or pushing LLaMA-based models).
Riley believes the investment in OpenAI is a strategic move by Microsoft to position itself as the primary platform that powers all businesses in the modern digital age.
As an example, he cites Microsoft's strategic approach since its acquisition of GitHub has fundamentally shifted the perception that valuable software development is exclusive to Linux or Mac. Now, every developer across the globe is using Microsoft's source code management tools, such as TFS or GitHub, or building the digital infrastructure using its IDEs, specifically Visual Studio Code.
Riley also believes Microsoft's overall strategy is to become the network on which work is conducted, as evidenced through its numerous acquisitions, "including OpenAI and its flagship product, ChatGPT." Microsoft is starting to make significant strides in this space.
To fully grasp its strategy, you'll first need an understanding of how ChatGPT and other AI technologies function under the hood.
"When OpenAI's Sam Altman mentions the launch of an assistant, it's not entirely accurate," he said. "They're launching an assistant platform — a significant distinction — as it offers personalization to cater to an individual's needs, and even facilitates communication between different assistants."
Ultimately, any product OpenAI or other competitors launch on the back of OpenAI will lead back to Microsoft as the platform of choice. This grants Microsoft control over the flow of communication and work in this modern era.
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He notes that when every vendor and request for proposal (RFP) belongs to the same company, that company wins by aggregate and can redistribute funds and focus efforts based on what works, thus solidifying its market dominance. This effectively makes Microsoft what research firms like Gartner refer to as the digital driver.
Nevertheless, he believes Microsoft will face competition, despite its significant investments. The competition will drive better outcomes for the industry, leading to improved engagement and toolsets that cater to emerging needs.
Fair and open competition are a requirement for this to work globally. He cites the European Union's Digital Markets Act as an example of legislative efforts to ensure the existence of a free and competitive market. With the recent application of DMA restrictions, Microsoft may face further scrutiny from the European Union due to its current near-monopoly position.
It's Early Days
Of course, all of this is speculation. OpenAI and Microsoft have enjoyed a close relationship and without specific information about OpenAI's reported work assistant, making definitive statements about potential conflict or competition between the two companies is challenging, said Vladimir Fomeko, director and founder of Infatica.
If OpenAI is developing a work assistant that overlaps with Microsoft's existing products or services, it could create conflict or competition. In the ever-changing world of technology and innovation, it is common for companies to develop similar offerings and strive to provide the best product or service to attract customers.
However, it is also possible that OpenAI's work assistant could complement or integrate with Microsoft's offerings, leading to a cooperative or collaborative relationship. Companies often find ways to collaborate despite having similar products, especially when they have different areas of expertise or target markets.
“Ultimately, the outcome will depend on the specifics of OpenAI's work assistant, Microsoft's response, and both companies' broader strategies and goals,” he said. “Remembering that the technology industry is dynamic, partnerships, conflicts and competition can all arise based on the evolving landscape and market demands.”