Microsoft Chairman and CEO Satya Nadella speaks to attendees at Microsoft’s Build conference in Seattle on May 23, 2023.

Dan DeLong | Microsoft

If there’s one company that has popularized artificial intelligence in the past year, it’s the small but richly funded startup OpenAI, the entity behind viral chatbot ChatGPT.

This week at its Build conference for software developers, Microsoft made extensive use of its collaboration with the startup, in which it’s invested billions.

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Front and center on Tuesday, the first day of the show, was a onstage conversation between Greg Brockman, OpenAI’s co-founder and president, and Kevin Scott, Microsoft’s technology chief and the person credited with building the unusually close relationship between the two companies.

“You heard it from Greg,” Scott told the crowd assembled at the Seattle Convention Center near the end of the talk. “You all are the ones who are going to make AI great.”

Toward that end, Microsoft announced a slew of products for developers that draw on OpenAI’s technology:

  • There are new Azure cloud tools for customized text summarization.
  • A forthcoming chatbot promises to help developers work with data and prepare it for analysis.
  • Developers will be able to build plug-ins that work inside of ChatGPT and the chatbots inside Microsoft’s own products, including one that will debut in Windows next month.
  • Developers who receive coding suggestions through the GitHub Copilot feature will gain access to a chatbot inside of the Windows Terminal command-line program.

Generative AI will change software forever, says Nadella

OpenAI released ChatGPT to the broad world in November, sparking lots of interest from consumers. Shortly thereafter, companies such as Atlassian, Morgan Stanley and Salesforce rushed to show off integrations of OpenAI’s GPT-4 large language model, which powers the chatbot. GPT-4 and alternatives from the likes of Amazon and Google have been trained on extensive internet data sets and have become capable of spitting out chunks of natural-sounding text.

The technology is a popular form of what has come to be called generative AI, which can take human input and respond with a computer-generated output.

“Every layer of the software stack is going to be changed forever and no better place to start than the actual developer stack,” Microsoft CEO Satya Nadella said during his Build keynote address on Tuesday. “We as developers, how do we build is fundamentally changing.”

It’s crucial for third-party developers to enrich Microsoft’s own software properties, such as the Microsoft 365 productivity software bundle. Such work might help Microsoft’s Teams communication app, for example, to become a more obvious hub for an increasingly wide selection of processes and tasks that companies need to carry out. That can make companies less likely to switch to alternatives such as Google Workspace.

Microsoft highlighted dozens of plug-in developers on Tuesday, including Adobe, Asana, Canva, Cloudflare, Redfin, Spotify and TripAdvisor. A demonstration showed the Windows chatbot turning on a Spotify playlist, creating a company logo with Adobe Express and sending the logo to a person’s colleagues over Teams in response to a series of typed messages.

Greg Brockman, OpenAI president and co-founder, and Kevin Scott, Microsoft chief technology officer, speak onstage at Microsoft’s Build conference in Seattle on May 23, 2023.

Dan DeLong | Microsoft

At the same time, Nadella has pushed for Microsoft to incorporate GPT-4 directly into Teams and older Microsoft products, such as the Bing search engine, often resulting in bots branded with the name Copilot. The Copilot term emphasizes collaboration with people, in contrast with (for example) the Autopilot advanced driver-assistance system for Tesla vehicles.

“We are adding Copilot into everything,” Scott Guthrie, executive vice president of Microsoft’s cloud and AI group, told CNBC in an interview last week. “It’s less of a top-down mandate, although we’re certainly pushing top-down. I think it’s something where we’ve actually evangelized internally and really got every team excited about. And we are building a common stack across Microsoft that the entire company is building on top of.”

Analysts responded favorably to the developer onslaught.

“The pace of MSFT’s GenAI innovation remains stunning to us,” Mizuho analysts with a buy rating on Microsoft stock wrote in a Wednesday note to clients.

Brockman hinted to developers that the cost of GPT-4, which runs in Azure, could come down.

“I think we did a 70% price reduction two years ago,” he told Scott. “Basically, this past year, we did a 90% cost reduction. A 10 times cost drop — like, that’s crazy, right? And I think we’re going to be able to do the same thing repeatedly with new models. And so GPT-4 right now, it’s expensive, it’s not fully available. But that’s one of the things that I think will change.”

WATCH: Microsoft Build 2023 unveils plugins and products that incorporate A.I.