Experts say ChatGPT could be a game-changer for Microsoft, as CEO Satya Nadella announces plans to roll out the technology across all of the company’s products.

icrosoft plans to make OpenAI’s generative AI technology such as ChatGPT available to billions of users by integrating it into all of its products, CEO Satya Nadella said this week. That means that ChatGPT’s ability to generate text through short prompts is likely on its way to the Office 365 product suite, including Microsoft Word, PowerPoint and Outlook.

Using OpenAI’s models, Microsoft Word’s autocomplete and autocorrect features could carry out more advanced tasks than style and grammar correction and generate longer chunks of text based on a few words. Though the company hasn’t announced any specific features yet, users could potentially be able to input prompts and generate complete PowerPoint presentations and emails.

These kinds of features could help Microsoft attract younger users. While Microsoft Office 365 has been a de facto standard for millions of enterprises, analysts say the tech giant has fallen behind in attracting those who gravitate toward collaborative-first products like Google Docs and Sheets.

“Microsoft has lost significant traction versus Google, especially in the education vertical and younger demographics across colleges and there's a generation that uses Google Docs as their default. Microsoft needs to change that,” Dan Ives, a tech analyst at Wedbush Securities, told Forbes. “I think ChatGPT would be the silver bullet that could change the paradigm between Google Docs and Microsoft Word.”

Along with bringing ChatGPT to its consumer-facing products, Microsoft announced this week that it will also be implementing OpenAI’s technology in Microsoft’s cloud computing platform Azure OpenAI Service, which will allow paying customers to access advanced AI models including GPT-3.5, the large language model underlying ChatGPT, and Dall E 2, the image generator.

In 2019, the Seattle-based tech giant invested $1 billion in OpenAI, became the AI research and development lab’s exclusive cloud provider and obtained an exclusive license to use and commercialize OpenAI’s GPT-3 technology. Microsoft is now reportedly in talks to invest $10 billion in the hot AI startup.

Google Workspace which encompasses collaborative tools like Google Drive, Docs, Meet, Slides and more had 3 billion users in 2021 – a statistic that includes unpaid subscribers as well as businesses. In 2021, Google Workspace had seven million paying subscribers, far lower than Office 365 paying customer base. Office 365, which consists of collaborative versions of Word, Excel, Outlook and other productivity apps, had 54.1 million consumer subscribers and more than 300 million paid commercial subscribers in 2021, who pay between $6 and $22 per user per month based on different plans. Google offers its Workspace tools for competitive pricing, which ranges between $6 and $18 per user per month (in 2022, Google discontinued Workspace’s free edition for businesses).

“Microsoft's weak spot is on the consumer, and that’s where Google thrives,” Ives says. “Implementing ChatGPT and artificial intelligence will really put gasoline in the growth engine on the consumer side.”

Microsoft has already introduced some AI features into its software: Microsoft Editor uses AI to correct writing tone, offer concise alternatives to sentences and generate summaries of long pieces of text, features that could be improved using ChatGPT’s technology. In 2020, the company announced that its Azure AI customers can use AI to caption images.

“For many years, Microsoft has built templates that can be used inside of Office, particularly Word and PowerPoint. Think about what they could do now... They'll just say, put in five keywords. And we'll write a letter for you,” says David Steinberg, CEO and cofounder of AI-based marketing firm Zeta Global. He added: “It's going to be very, very powerful.”

Along with competing on collaboration and workspace products, Google and Microsoft are also head-to-head competitors on other fronts, including search. Microsoft has indicated that it plans to use OpenAI’s natural and human-sounding chatbot ChatGPT to improve Microsoft’s web search engine Bing.

Experts say Microsoft’s Azure cloud computing infrastructure and access to vast amounts of data could help it supercharge OpenAI’s models. The Microsoft Graph is one the largest datasets of human activity at work and contains data from across the company’s applications, including 400 billion emails, 500 million LinkedIn members, 180 million active Office 365 users and 800 million Windows 10 devices, according to a Microsoft report. The company trains its AI models using 420 billion interactions that take place on Microsoft Office every month, the report showed.

The company uses all of this data to identify patterns and interpret and perform tasks in other applications. For instance, data from Bing is used to provide stock information in Microsoft Excel, and LinkedIn data is used for the Resume Builder tool in Word. Deutsche Bank analyst Brad Zelnick says the company could combine this network of data with OpenAI’s algorithms to automate the daily tasks of knowledge workers.

“The real opportunity is not just in implementing the technology, but who's going to implement it best, who's going to be able to train the applications of this technology with the richest data set,” he says. “I think when you consider the advantages as it relates to Azure, the implementation and training of these algorithms require massive amounts of computing, data analytics and data infrastructure. This is a real opportunity for Microsoft on the Azure side of the house.”

After Google’s 2014 acquisition of artificial intelligence company DeepMind, Google has also made parallel and similar headway in AI research. For instance, Google’s LaMDA represented a breakthrough in large language models, the technology that underlies ChatGPT, and it also allows users to ask questions to a chatbot that can respond in a human-sounding manner. Former Apple CEO and AI-based enterprise software firm Zeta cofounder John Sculley says Google had a clear opportunity to win the race in AI but has instead focused its investments on its core products including Google Search and YouTube.

“Google is in the advertising business. And it builds its AI capability around processing massive amounts of data as it pertains to search. It hasn’t gone into the productivity space with automation at the scale that Microsoft intends to,” Sculley says.

May Habibi, the CEO of Writer AI, an AI content writing platform for businesses and teams, says another reason why big tech companies like Google may have refrained from rolling out generative AI on their products like Docs and Slides could be due to the risks of data governance, security and legal issues.

Although ChatGPT can produce answers in an authoritative and easy to comprehend tone, the chatbot has already become infamous for being inaccurate. Tech media company CNET secretly used ChatGPT to write its articles and was later forced to issue corrections because they contained multiple inaccuracies on basic concepts. If ChatGPT renders similar inaccuracies within Word or PowerPoint, it could put off customers from relying on it, Habibi says.

“I think the reason Google Docs and Gmail have limited themselves to simple autocomplete isn't because [Google’s AI model] LaMDa isn't capable of longer length content generation,” Habibi told Forbes. “It's really because Google has shied away from releasing their technology, knowing the kind of downsides of large language models when it comes to the issue of plausible bullshit.”

Priya Vijayarajendran, who was the vice president of data and AI at Microsoft from 2019 to 2022 and worked closely with OpenAI CEO Sam Altman and his team, says OpenAI originally wanted to make advanced AI models widely accessible and open source so that everyone could take advantage of it. But while it started out as a nonprofit, OpenAI has since shifted to a for-profit business model as it partnered with Microsoft to commercialize its AI.

“From what I gathered from my colleagues and friends at Microsoft is that they are on a mission to productize it to a larger benefit for the rest of them. So the real proof in the pudding is who gets the product out there into the market,” Vijayarajendran says. “I think Sam and the team had a noble vision. And I hope that the integrity of the vision stays in spite of Microsoft having a huge share.”

-Forbes