Microsoft unveils AI office Copilot in fast-moving race with Google

March 16 (Reuters) - Microsoft Corp (MSFT.O) on Thursday trumpeted its latest plans to put artificial intelligence into the hands of more users, answering a spate of unveilings this week by its rival Google (GOOGL.O) with upgrades to its own widely used office software.

The technology company previewed a new AI "Copilot" for Microsoft 365, its product suite that includes Word documents, Excel spreadsheets, PowerPoint presentations and Outlook emails. First open to some 20 enterprises for testing, AI will offer a draft in these applications, speeding up content creation and freeing up workers' time, Microsoft said.

The Redmond, Washington-based company, outpacing peers through investments in ChatGPT's creator OpenAI, also showcased a new "business chat" experience that can pull data and perform tasks across applications on a user's written command.

"We believe this next generation of AI will unlock a new wave of productivity growth," Satya Nadella, Microsoft's chief executive, said in an online presentation.

Microsoft's share price rose about 4% on the news.

This week's drumbeat of developments including new funding for AI startup Adept reflects how companies large and small are locked in a fierce competition to deploy software that could reshape how people work.

At the center are Microsoft and Google-owner Alphabet Inc, which on Tuesday touted AI features for Gmail and a "magic wand" to draft prose in its own word processor. The capabilities that Microsoft and Google showcased are similar.

The frenzy to invest in and build new products began with last year's launch of ChatGPT, the chatbot sensation that showed the public the potential of so-called large language models.

Such technology learns from past data how to create content anew. It has evolved rapidly. Just this week, OpenAI began the release of a more-powerful version known as GPT-4. This partly underpins Microsoft's Copilot features, along with an older GPT-3.5 model, business and application data, Microsoft said.

The new capabilities - offered through Microsoft's cloud - are poised to attract business and turn around slowing revenue growth, RBC analyst Rishi Jaluria said.

The Copilot will "drive more usage of Microsoft Office and increase the separation versus competitors," Jaluria said.

TAKING NOTES FOR YOU

One of the company's biggest updates on Thursday was in Excel.

Microsoft said AI can open up the computational wizardry of its spreadsheet software, long the domain of trained analysts, to any person able to describe a calculation they would like in plain text.

Similar to live notes that Google showed reporters this week, Microsoft said its Copilot can summarize virtual meetings as they happen in its Teams collaboration software.

In an interview, Jon Friedman, a corporate vice president at Microsoft, demonstrated this capability. The Copilot generated bullet points summarizing questions that Reuters asked, including whether Microsoft can roll out the technology profitably.

Large language models require lots of computing power and costs to run.

Friedman said Microsoft will make the deployment work economically.

The Copilot summarized his answer thus, during the interview: "Microsoft is working on lowering the cost and increasing the speed and fidelity of the models, but did not disclose the pricing or tiring of the copilot system." (It meant to say "tiering.")

Fine-tuning the technology and ensuring that its answers are factual is why Microsoft is testing Copilot with some customers before a wider rollout, Friedman said. An "amazing thing about large language models is they're very confident, and they get things wrong," Friedman added.

Friedman pointed to Microsoft's business chat experience as the biggest development on Thursday because it can handle tasks across applications. For instance, a user can ask, "Tell my team how we updated the product strategy," and the AI will take cues from a morning's worth of emails, meetings and chat threads, Microsoft said.