Report: Microsoft is developing its own artificial intelligence model that is smaller and cheaper than OpenAI

Microsoft is expanding its internal focus on developing artificial intelligence (AI) technology that requires less computing power and financial resources. According to the latest report from The Information, the company has formed a new team dedicated to building so-called "small language models" (SLM).

These SLMs are designed to provide similar conversational and generative capabilities to large language models (LLMs) such as OpenAI’s GPT, but with significantly lower hardware requirements. This will give Microsoft's AI products and services a lower associated cost and carbon footprint than externally developed alternatives.

The GenAI team is expected to be integrated into Microsoft's Azure cloud computing division and will focus on creating smaller language models. To support the GenAI team, Microsoft has also transferred several top developers from its research group. Microsoft Corporate Vice President Misha Bilenko will lead the team's work.

The goal of the GenAI team is to create artificial intelligence that matches or even exceeds the capabilities of models offered by companies like OpenAI, while optimizing for smaller scales.

To date, Microsoft has incorporated several of OpenAI's artificial intelligence capabilities into its products. For example, Bing uses GPT-4 in Copilot and Bing Image Creator uses Dall-E in image generation. In recent weeks, the company has also launched Copilot Pro - a subscription service for individual consumers that provides them with more advanced artificial intelligence capabilities.

The report follows OpenAI’s recent launch of the GPT store, where users can create, share and sell custom AI models based on OpenAI language models. Likewise, Microsoft has announced its own plans to provide Copilot with AI chatbots customized for specific needs and topics.

However, relying on externally developed AI comes with some expense and a lack of control over the technology itself. Microsoft's commitment to developing smaller, more affordable AI technology could potentially open up new ways for companies to provide their own solutions and reduce reliance on third-party vendors.

The U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) are said to want to investigate OpenAI's relationship with Microsoft, in case you missed it. Last week, we reported that both agencies were eager to investigate the deal, particularly Microsoft's involvement and its impact on competition in the artificial intelligence industry.