Hey everyone. so breaking news is about to come up. As you can see, the CEO of Microsoft is about to be on CNBC Regarding Open AI, This is a big deal. It's happening here within the next few minutes he's actually scheduled for this very minute.

Uh, they are finishing up a discussion right here. Let's just quickly catch up on why this is such a big Catalyst Very, very important. It's important for Microsoft because yesterday the idea was that Sam Alman and uh, Greg Brockman would the former president of Open AI would end up joining Microsoft and creating an AI team at Microsoft. This morning, we discussed how creating an AI team at Microsoft is a big deal because it means more Capex spending on artificial intelligence products.

specifically Gpus making your own Gpus and CPUs or Tpus tensor processing units. These are Big deals. So the the cap X that goes into AI is massive I We're talking 10 T of billions of dollars of differences here per year. These are annual expenses.

It's insane. Uh, my estimates are that Nvidia within the next three to four years will be somewhere at potentially as high of a $100 billion annual revenue rate for chips. and I think their margins will probably get compressed in time as competition grows and that. But we have to replace this Legacy multi-trillion dollar infrastructure of AI chips.

So a lot of focus here on Microsoft. What is the C going to say? Uh, because right now we've got somewhere around 720 out of 770 is employees over at Openai protesting the board at the very moment suggesting they will not continue working with Open Aai and they will be willing to go to Microsoft if the board doesn't resign. This is actually pretty big deal. At the same time, you're and you're getting uh folks who are saying uh, like Salesforce for example, who are saying hey, we're gonna be uh, inviting people who left Open Aai to come to Salesforce Well, it's the same thing that Elon Musk is subtly doing with XI tweeting hey, by the way, we're hiring you know there everybody wants these people.

They're seen as brilliant for training the language learning models. I'm not suggesting that in any way to discredit, but anyway, let's listen here. CEO SAA Nadella John Over to you Here We go here we go. Thank you Sa Nella thank you for joining us Live here first on CNBC It's been quite a few days since I was with you in Seattle um with Open AI leadership in turmoil So first I got to ask is Sam Alman going to be a Microsoft employee? Yeah I mean we are on Friday morning John I got up and I was very committed to our question.

You know customers and confident in our technology, road map and um and really partnered with Open Ai and really part partnered with Sam and here as we speak on Monday I guess it is today uh it's exactly the same place I am which is I feel that we have all the technology uh, and capability to keep innovating on the products you saw at our Ignite conference last week. up and down the stack from Silicon to co-pilots and and and committed to Open Ai and Sam And that's you know, irrespective of what configuration you know, obviously we want Sam and Greg to have a fantastic home if they're not going to be in Open Ai and all the colleagues at Microsoft Uh, but you know I am exactly where I was on Friday morning. Well, you're about the only one, so let me maybe ask it this way. Um, how clear is it to you whether Sam is going back to Open Aai and whether the 700 employees there who seem to be loyal to him are staying at Open AI or coming to Microsoft Look I mean that is for you know, Open AI Board and management employees chose I think at this point for me I just want John in this moment, right? What is it that I care about I care about just making sure that we can continue to innovate and I As I said, I feel very, very confident.

Quite frankly, Microsoft has all the capability to just do that on our own. But we chose to explicitly partner with Open Ai and we want to continue to do so and so And obviously that depends on the people and and staying there or coming to Microsoft. So I'm open to both options. But one thing I will not do is stop innovating and so therefore that's kind.

what I will optimize on into making sure that's not the question God the road map we you know we talked about and there was so much excitement around I Thought I was gonna like this guy Seem to want confidence I'm sure Microsoft employees do too. What needs to happen for Open AI to be stable enough for you and Microsoft's customers to trust it Can members of the current board stay? Does Microsoft need a seat on the board? Yeah I mean I think at this point I think it's very, very clear that something has to change around the governance. uh and if that's sort of, you know and we'll have a good dialogue with their board on that and uh and we'll you know, walk through that as time evolves. But the most important thing for me for customers to know is today we have all the capability and this is where I know we love to talk about.

uh you know here has a way to the thought experiment. Sam Alman Once chose Microsoft and he chose Microsoft again. why do you think that is? It is because of the capability of our company to be able to innovate with Open Ai and so that should speak volumes to why customers can have confidence that come what may Microsoft will be there will continue to have the products and lead in AI That's I think the core message for our customers. Okay, well one of the things we know is coming is compet ition next week a AWS is going to have reinvent I Suspect they're going to say hey, look, we're stable.

You can trust us to have all our employees who are working on AI still here. You've already got Mark Benny off CEO of Salesforce trying to hire away Open AI employees in this turmoil. So how long do you have to get this kind of stabilization that at least your competitors seem to think has you in a vulnerable position? Yeah, you know I think you. There are these charts that float around on if you think about the AI papers AI Innovations AI researchers AI people I think people should just go refresh their memories.

Uh, on what that capability chart looks like. if you're not number one or number two, uh, I would be surprised and such should speak volumes. and I you know, look, we welcome competition and these are all credible competitors. Uh, but you know it's not like we just learned about AI because of Open AI We had a lot of Open AI capability before with Open Ai and after even at Ignite, think about this with Open AI We have the leading Llm or the large model and we have the leading small model with five which we announced the 2.0 So it just speaks to I Think the breath and by the way, we have all the open source models on Azure as well.

uh from Mistral to Llama and we love it and we have the best tooling, the best data architecture around. Oh, it's just a sales pit, co-pilot and get up co-pilot So I I I Don't feel that you know we, if anything we are much more Resolute in our sort of road map and pushing forward on the Innovation and I Feel like hey, look a lot of people. There's a lot of talk that there are very few people with real products with at scale innovating on behalf of our customers. You mentioned governance before.

It seems to me that it's likely that you come out of this situation as Microsoft with more leverage in the open Ey AI relationship one way or another than you had Friday morning. Okay, because your relationship with Sam Altman remains close and it seems like Sam is either going back there with more control or coming to Microsoft and that gives you an amount of Leverage am I Reading that wrong? Yeah, look John I Don't think of this as leverage I mean the reality I think is the world is recognizing how deeply partnered we were with Openai and Sam and all of the dependency Open AI has on Microsoft to do our world. You know, worldclass work around it right? We do the kernel optimizations underneath, we do the infrastructure we build Tools around it, We build products around it. So I feel like hey, look We had a fantastic partnership on Friday and we have a fantastic partnership today.

and if things change in the open AI side in terms of who is there or who's not there As as I said, we will have a fantastic home for the people who want to continue to do the same work with the same Mission at Microsoft. Well s I'm not sure what this initial Rift between Sam and the board was about. maybe you know better than I Do feel free to to tell us uh, and the viewers if you if you want to expound on that, but either way it seems like there is a segment of people who were concerned about the development of AI being driven by profit. And that's the reason why Open Ai and its board were structured the way they were to begin with.

If the governance Ch, Es and Microsoft continues to have this relationship, what Assurance can you give people who are concerned about this that the development of AI won't purely be driven by profit? it will be yeah. I Mean, look for I Think about this. This is an interesting question. John I've always sort of subscribed to.

You know that you know the idea that the social contract of a corporation is to drive profitable solutions to the challenges of people in Planet And so to when I Think about the license for to op operate for Microsoft Yes, of course we have to generate profit, but at the end of the day we have to create solutions that are useful and are real solutions to challenges of people in Planet. So this is not about profit for profit sake, but it's about driving profit by doing work that the society needs. That's how I think we have a license to operate in every community and Country uh that we operate in and so that's what we will continue to pursue. And then of course the Open.

AI It's a different structure with a nonprofit and we respect that. The other thing that they really care about is safety. That was very clear even the day when Sam and I got together originally with the Open A Partnership. We care about it.

When we talk about trust in technology, we want to make sure that we're dealing with not only the the benefits of Technology but the unintended consequences of the technology from day one as opposed to waiting for uh, things to happen. And so that's some. AI Safety Research for the long term and even here and now guard rails. Uh, whether it's on bias or disinformation or what have you is something that we are putting a lot of energy into and we'll continue to do so well.

I Know you're taking a lot of teams calls today, so Sa I appreciate you taking the time to make this your first media appearance here with me on CNBC Sati Nadella CEO of Microsoft Okay, he's going out of Bloomberg in just a minute I Don't know that we'll uh get any more out of him but I'll switch to it. Let me just say total total Dodge By the way, on anything going on here, here's the latest on probably what's actually happening is what you have is you have a situation where the investors in Open AI are like oh my gosh, all of our money just blew up in smoke. So if all of our money blows up in smoke, what are we gonna do? What are we gonna do? Well how about before it blows up in smoke, we'll just offer Sam Alman more money to come back or something that I'm I'm convinced that's what's going on? Is there are negotiations going on right now behind the scenes of in investors or from investors like Tyber Global Thrive I think it's uh, it's I can't never pronounce their this one correctly but it's like Kosla Kosla Ventures whatever. Uh, these are the companies uh that are Venture firms who have invested money uh into Open Ai and they don't want to lose money.

So I mean it makes sense that they're probably calling up and blowing up Sam's phone right now saying please don't leave open Ai go back We'll pay you millions of dollars. Well maybe they even say we'll pay you billions of dollars. just please go back Uh, that? I I'm I'm convinced that's exactly what's happening. So uh, we'll see.

uh, but it looks like U the CEO is hopping onto Bloomberg in just a moment. Uh oh yep. I have the video of it here. So we're waiting for this to begin.

I Suspect we're going to get the same nonsense. Uh, I agree I see the comments here. He would definitely make a great a politician. Uh, and Nadella did basically nothing to give us any kind of insight as to whether or not uh Sam Ultman was actually coming.

uh, to uh, um, Microsoft Yesterday, it was seemed like it was a slam dunk. uh, and now the Saga is continuing that. Maybe it wasn't as much of a s slam dunk as we thought. It's worth noting that right now, some of the stuff that's circulating on uh, the internet uh, is.

uh, there's a lot about people uh posting this suggesting they want to or are leaving. Microsoft Uh so I don't know if this is just Spam or what this is, but here's for example, growing Daniel He says I've been at Microsoft for six years, but sadly the time is coming to an end. The Embrace by our leadership of dangerous technologists like Sam Ultman has made me realize this is not a company that shares my values. I'm excited to announce that I have accepted a research position at Open AI it sound, it sounds and reads like a joke to me.

I I I I I Don't know if they're serious I mean I feel like you're trying to jump ship to hop onto a a burning ship? Uh so I know it seems a little seems a little kooky. Anyway, Sam's supposed to be the first uh on after the Bloomberg commercial here? Uh, so we'll see. but but again, I'm not expecting anything different. He was asked twice.

hey, so is Sam Alman coming? Oh uh yeah, you know we had a great discussion on Friday I'm like bro answer the question, why can't you just be real? like just say hey look he's negotiating right now. multiple different options. We extended an offer that he said he was interested in. You know, he obviously has the right to change his mind.

We don't think he'll change his mind, but uh, you know we, we're not him. so maybe you should ask him right? Like in my opinion, that's that's the way to answer the question. It's not that freaking hard, but he doesn't want to see the stock price tank on Microsoft So uh, you know we'll We'll see. you know.

Remember what he wrote yesterday on Twitter he wrote and we are extremely excited to share the news that Sam Ultman and Greg Brockman together with colleagues will be joining will be joining did not say may be joining he said will be joining anyway. The only thing that Sam will be joining now is or Nadela will be joining now apparently is Bloomberg So let's see if we uh uh, it doesn't look like they're going to recap here, but you know I'll quote tweet that if you want to go to my Twitter real meetkevin uh you can see the quote tweet in about 10 seconds. Oh let's see. So again, the full quote was uh, we are excited to announce that Sam Altman and Greg Brockman will be joining Microsoft that is uh, what we're going to quote tweet and quote uh okay, there we go.

So much for uh Sam Oldman dot dot dot will be joining Microsoft Uh, okay, doesn't seem so certain anymore. Yeah, all right. So then you could see that quote tweet waiting for Nadella I Wish they would actually like press him on that. Like you said, he will be joining.

Why are you dodging it now? What? So dodgy, not cool. Uh, let's listen in what What they're complaining about here potentially really dampen the momentum that we had seen from the recent rally in Govern. All right, they're just talking about the rally and kind of doing a little catchup. Supposedly Sam's supposed to be going or uh yeah.

Well, um, Nadella is supposed to be going SAA Nadella supposed to be going directly from CNBC to this Bloomberg uh I imagine it's just connecting on zoom and they're waiting for him to do that. I Also suspect there's a good chance he's just going to say the same thing. Uh, but uh, we shall see. Anyway, it's crazy.

All right, let's keep listening here for a moment. We're talking about over 90% of S&P 500 firms having reported results for the third quarter earnings up about 4% year over year wait Wait. Listen to this. In the meantime, Microsoft just announced that they're giving Jun your litigators $200,000 bonuses and at the same time, it's worth noting that you have uh Mr Mark Benof from Salesforce now posting two recruitment ads on his Twitter within the last uh, couple hours here.

So uh, Salesforce will match any open AI researcher who has tendered their resignation full cash and Equity immediately to uh, our Salesforce Einstein research team and then an hour later again slightly differently. It's almost like must really be looking for some employees. Anyway, here he is and dramatic. last 72 to 48 hours and I want to start with let's see if she can ask the real questions.

Emily Let's see it open. AI says it's hired a new CEO we're reporting there. our efforts to get Sam Altman back tell us where things stand. hit them.

First of all, it's great to be with you. Um, you know on Friday morning? Uh, we were very excited, committed and confident in our Innovation road map to bring this next generation of AI to our customers. Um, and we feel fantastic and capable of doing that. Uh, and we were partnered with Open Ai and we have partnered with Sam and that's exactly where I am on Monday afternoon if you will, because we think that we can, You know we are leading in this next generation of AI technology.

Uh, we continue to be committed to Open Ai and we continue to to be committed to Sam and Greg and the team irrespective of where they are and you know I I Think about Sam has chosen multiple times now to work with us and that's fantastic to see. and I Think the real thing is that the capability that Microsoft has across the tech stack is what attracts uh, great people like Sam you know, and people like Sam and you know innovators like Sam when it comes to AI to come to us and we're thrilled about it. You incredibly quickly hired Sam as well as Greg. We are, uh, hearing that Sam wants to return.

investors want him to return to Open AI. How would you feel about that? Yeah, as I said, we really want to partner with Open Ai and we want to partner with Sam And so irrespective of where Sam is, he's working with Microsoft and that is the case on Friday and that'll be. That's the case today. and we will.

I Absolutely believe that'll be the case tomorrow. He's redefining. So what are the conversations you've had? Uh with Open Ai's current board From their perspective, where do things stand and have you talked with EMT Shear The new interim CEO Yeah, I've had conversations with EMT and again, it's the same thing. There's no real difference there from where we were when we were working with Meera and she was interim CEO when Sam was CEO and EMT.

So my message to them EMT is very clear, which is hey, look, we remain very very committed to Open AI its Mission and its sort of road map and they can count on us. And and then as I said, we also very committed to Sam and Greg and team that want to join us. Uh, if they're not at Open AI or anyone else who's at Open AI wants to go somewhere else, we want them to come to Microsoft and continue to work Uh here and in partnership with Open AI To your knowledge, why was Sam fired and to your knowledge, was he involved in any wrongdoing? Has the board given you a reason? not. Yeah, As far as I'm concerned, you know we were.

As I said, we were very confident in Sam and his leadership team. I've not been told about anything I You know they published internally at Open AI that, uh, there is not. The board has not talked about anything that Sam did other than some breakdown in Communications and I. You know I'm not directly was told by anyone from their board about any issues and so therefore I remain confident in Sam and his leadership uh and capability.

and that's why you know we want to welcome him to Microsoft Now we understand that to support a a return of Sam Alman 2 Open AI Microsoft wants some changes to the board to governance to its overall contract with Open AI So something like this never happens again. What specifically are you looking for? For example, would you want a board seat and if not, what else? yeah I mean I Think we definitely will want some governance changes so that you know we know surprises are bad and uh, we just want to make make sure that things are done in a way that will allow us to continue to partner. Well, that's about it right? You know this idea that somehow you know suddenly changes happen without being you know in the loop is not good, Uh and uh. We will definitely ensure that some of the changes that are needed happen and and we continue to be able to go along on the partnership with Open AI So how are you envisioning this role with the sort of you know Advanced AI team that Sam and Greg would be joining and leading? Can can you explain that And are they actually Microsoft employees right now? Like who do they work for? Good question, good, redirect all in the process of joining and yes, I mean the thing is, look, you know we have a ton of AI expertise in this company.

you know in fact, at our Ignite conference last week uh, we talked about all of the great work Open AI is doing and on Azure and all the you know models and tools that we built around it. and we also talked about all the open source models that are on Azure um from you know llama and M stal and um JS and everything you know and then also you know in fact, not only are we leaders in Llms uh, in partnership with Open AI but we're also leaders in Slms or the small language models with Fi and we talked about that which is all developed by Microsoft research. So uh, what we I'm excited about is sort of creating another team that's really going to have high ambition on Leading Edge Advanced AI Work that Sam and Greg are excited about. This is something that you know we've talked a lot about with them.

You know what? what happens in 25? What happens in 30? What do we do to advance both the system side the science side? Um, and that's the thing that we will be pushing on now. Many folks I'm speaking with don't see Sam as a sort of big tech company guy. He has all of these side produ projects that um, you know we've already heard about. We've reported on new projects.

Would he be able to pursue these side projects while being employed by? Microsoft Yeah, I'm sure you know, like you know, Sam Um has got broad interests and Broad uh, Investments and so on and we'll definitely, you know, work through the governance aspects of it. Uh, but most importantly I Think he would want to only work at Microsoft if he wants to spend his full-time time on really pursuing the mission. just like how he was spending his time on Open. Ai And so that's kind of uh, the idea behind having him lead this Advanced uh research team around AI with Greg and others and you know that's an exciting you know thing for us to look forward to.

I'm curious. just your reaction to you know the last three days of events. Are you now more concerned than ever about AI safety? Given we've seen clearly how fragile these institutions are, it's a great point. I Mean the thing that I think in some sense I've always felt that we should think about the unintended consequences of any great advances in technology from day one versus dealing with them later.

So in some sense I welcome this dialogue if you will, of safety and safety first, even in technology and technological development, right? I Mean that's I Think in some sense, it should be celebrated that we, as a tech industry, have gotten to a place, uh, where. We don't think of this as a tradeoff, but we think about this as two considerations that are both first class, right? One is, how do we build technology so that everybody in the world can have a doctor ex an that that they can read or a tutor or uh, you know, a rural farmer in India has more agency because of technology that was developed in the west coast of the United States a few months earlier. These are unbelievable things that democratize access on one side, but on the other side. being grounded on the Here and Now harms right.

Whether it's election interference or deep fakes or bias or biot terrorism and having the guard rails against it or even the some of the you know AI takeoff, existential risks and the alignment research that is required. So I I think that there is a real robust dialogue uh, that's happening which is and real work like when I think about Microsoft We've done in fact, some of the big most work around AI alignment AI safety guard rails. So for example, even the open source models we launched last week all have benefit from all the guardrail work we did around open AI models. So throughout the reporting process we've heard you know concerns about potential regulatory issues and of course the power that Microsoft already has the power that Microsoft has in AI Have you on your end, worked through all the potential legal issues at play here? I mean I Just spoke to one investor who said, you know they're considering suing open AI Like you know there's a there's a lot of things that have yet, it seems to be figured out.

And do you know what Microsoft's legal liability is and Open Ai's legal liability is given your significant investment there? Yeah, look I I'm I I'm most focused on and most excited about our ability to continue to innovate. Emily I mean I I'll let the lawyers sort of figure out what liabilities are, but I think we have all the capability, all the IP uh and all the things that we need in order to continue to essentially control our destiny here so that we can continue to innovate on behalf of our customers. That's what matters, That's what makes Microsoft Microsoft uh and we'll continue to do what we need to do. Okay, so quick last question.

this is today. Who's going to be CEO of open AI Tomorrow you tell me I will leave it to open Ai and it's bored All right SAA Adella CEO of okay she got a lot more out of him than CNBC did. This is a big deal. Here's what I gathered.

You may have missed it. Let me give you a breakdown of this quick reminder: Black Friday Sales Live! Just go to M. Kevin.com You already know this. You know the drill.

Okay, so uh and they're awesome. Great new products So uh okay. The side projects that Sam Alman is interested in include an AI Chips startup and an AI Hardware startup potentially with Johnny IES who worked as a chief designer over at Apple Now there was this question here is of hey, would Sam Alman be able to work on those side projects and Nadella's answer and we know he's kind of dodgy so you kind of have to filter through the BS His answer was like oh well, you know you know we Yeah, yeah, we would just hope that he could commit his full-time efforts to Microsoft So that was kind of like a yeah, know, that's kind of what I got Microsoft's probably like sure, you can come work for us now sign this non-compete Microsoft makes chips Microsoft might be making AI Hardware by joining Microsoft Sam Alman might be substantially restricting what he's going to be able to do as an entrepreneur himself. Now, when asked are they going to be employees because she blun monly asked that which was fantastic.

She says well, he's in the process and we look forward to working with him. Well, you're working with him probably no matter what I mean you could be working with him if you call him up for advice once a year, you're technically working with him. he's not an employee at Microsoft and now this potential of open uh AI investors mulling to sue the board over the CEO fire firing. which I mean this is highly predictable that this was going to happen.

Uh, and everybody's trying to get the Open AI employees it's It's like it's literally a feeding frenzy out there. I Quite frankly I think Mark Benny off is like how can we get more of these guys cuz our AI sucks Okay I'm just saying that's my opinion. All right. Look I called him up I called him up during the AI CR I'm like yo I want to try this Salesforce Einstein GPT chatbot or whatever you got and you know what they said this was back in March so maybe it's different now.

they're like oh, we we have that on the website but it's it's not a product that's available yet and I'm like whatat are you smoking like are you just trying to sell your stock like what is this? uh like this is ridiculous. This is like borderline fraudulent anyway. I I just get pissed and heeded about that kind of stuff. So uh.

anyway, look um, this is stupid. uh it's insane what's going on I Can't wait to get more insight into everything that's actually going on. but Nadela certainly didn't give us any insight here. and I this morning I'm like look I like Microsoft you know the CEO did a 40 chess move here.

Wow good for him I I'm expecting to see like a badass on CNBC and Bloomberg and what I got was a weny baby I got a wany baby now I know some people be like but Kevin well it's gonna be the Microsoft shareholders but Kevin he had to say that I don't care, you know, just be blunt like hey he's thinking about his options. We gave him a really good offer yesterday. he said yes, then it came down to the paperwork and now we're negotiating. It could happen, might not be blun about it.

Ah, anyway, drives me nuts. so that's the latest on this open AI disaster. When I end the stream now jump on over to the Meet Kevin podcast I'm going to be live in 14 minutes with Mikey in the Meet Kevin podcast and we'll be talking for probably an hour hour and a half about all the news. So join me over there.

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