Microsoft wants Google to dance

The industry is buzzing about dueling AI announcements from Microsoft and Google that point to the most interesting Big Tech rivalry in years. I love the spectacle of it all but worry that we are getting ahead of ourselves. Google’s search dominance isn’t going away anytime soon for reasons I explore later on. That said, Google’s hold over search does feel susceptible to loosening for the first time in a very long time. That’s enough to cause an adrenaline rush up in Redmond.

Also in this edition: what I’m hearing about Google’s forthcoming ChatGPT competitor from people who are already using it, a ranking of the hottest private tech companies, a bunch of notable people moves, and the scoop on a big leak investigation inside Meta. But first…

“They will definitely want to come out and show that they can dance. And I want people to know that we made them dance.”

This clip of Microsoft CEO Satya Nadella being interviewed by my colleague Nilay Patel has gone viral, and deservingly so. (If you haven’t already, I highly recommend you watch the whole conversation on The Verge’s YouTube channel.) It’s rare to see a Big Tech CEO take a shot at a competitor like this publically, and Nadella is winning fans for his stone-cold audacity.

The “they” Nadella is referring to is, of course, Google, whose shrinking margins present an opportunity for Microsoft that, as Nadella told Patel in their interview, would make Steve Ballmer say, “Oh my God.” OpenAI’s ChatGPT is estimated to be the fastest-growing software product of all time, and now Nadella is hoping to capture lighting in a bottle twice by bundling it into Bing. Nadella’s point about margins is that Microsoft, with only about 3 percent of the search market, can afford to take risks that Google cannot. Within 48 hours of announcing the new Bing featuring OpenAI’s technology, more than 1 million people signed up to get access. I think that bears repeating: people are flocking to try Bing in the year 2023.

Is the future of search going to look more like ChatGPT and less like an ad-riddled list of links? The answer, as Microsoft demonstrated this week, is probably somewhere in the middle. In the meantime…

This week kicked off with Google CEO Sundar Pichai issuing a rallying cry to his employees. As reporters were flying to Redmond for Microsoft’s Bing announcement, Pichai sent an internal memo telling Googlers that they’ll be expected to test the company’s answer to ChatGPT starting next week.

It turns out that employees across various divisions of Google have already been able to use the coming chatbot, called Bard, for a while. You just have to know who to ask. I talked to a few people who have been playing around with Bard, and the consensus is that, in its current iteration, it doesn’t seem to dramatically improve on ChatGPT. That said, it does seem a little faster at giving answers, and unlike ChatGPT, it shows sources for the answers it gives, including the websites used to build an answer (albeit not very prominently). Like you would expect, Bard won’t answer most problematic prompts, including ones designed to get it to share misinformation, financial advice, or the endorsement of illegal behavior.

Google says Bard is currently being put through the paces by external “trusted testers” ahead of a wider release in the coming weeks. I asked Google who exactly these testers are, and the company declined to say, beyond that they are a diverse group and managed by a third party. That makes me think this is more of an Accenture–type testing situation, similar to how Google and others outsource the most mundane parts of content moderation to outside firms.

A monthslong leak investigation by Meta has uncovered the source behind detailed renders of unannounced VR headsets, including the highly anticipated Quest 3, that were published last year by a YouTuber named Brad Lynch. CTO Andrew Bosworth shared the news this week with employees in an internal post that I saw. He said Meta has cut ties with the leaker, who I’m told was a third-party contractor and asked for a share of revenue from the ads running against Lynch’s YouTube videos.

Lynch didn’t deny this when I asked him for comment. “They might have asked because I wasn’t willing to give much money up front” for the leaked material, he said. “I’m just one guy who loves VR and just enjoys talking with industry friends and reporting what I hear. And I’m definitely not getting rich from it.” A spokesperson for Meta declined to comment.

(For what it’s worth, paying a source for leaked information is a fireable offense in any self-respecting newsroom and something I would never do.)

Since I first reported on comments by Meta CEO Mark Zuckerberg addressing the company’s problem of having too many managers, fear and loathing about the coming “flattening” has become a meme inside the company. Bloomberg followed up this week with a report saying that some managers at Meta are already being asked to convert to individual contributors, which I can also confirm.

While there hasn’t been companywide communication about exactly how The Great Flattening will work, my understanding is that there will be guidance issued for how many direct reports managers should have and that more mid-level managers will be told to either change teams, become a non-manager, or leave with severance. The hope is to fix bloated reporting chains like this one that was recently shared in Meta’s employee-only Blind channel: “IC -> M -> M-> M-> D -> D -> VP -> VP -> VP -> VP -> Cox -> Zuck. How did this insanity happen?”

After Microsoft and Google’s announcements this week, I wanted to chat with Sridhar Ramaswamy. As the former SVP of ads at Google and current CEO of the search engine Neeva, he understands the space better than most. Neeva is already using generative AI to help answer queries for paid subscribers, and based on my experience, it’s quite good. A recent search I did for “how to move mastodon servers” generated a paragraph with the key steps and links to the three websites used to create the answer. It was much easier than hunting for the steps on my own.

I wanted to hear what Ramaswamy thought about incorporating AI into search (for those unaware: ”LLMs” stands for “large language models”) and what really matters for an engine to be competitive with Google. Here’s part of our text conversation:

A friend forwarded me recent survey data from Setter Capital, which regularly polls hundreds of private investors to determine the most sought-after tech stocks in the secondary market. While anecdotal, I think it’s an interesting temperature check on the buzziest, later-stage private tech names. I’ve included the top 10 in the chart below. SpaceX and Stripe hold the top two spots for the ninth consecutive quarter.

That’s it for this week! As always, if you liked what you read, please forward it to a friend.

I’ll be back next Thursday. In the meantime, if you have any feedback on this week’s edition, clever ChatGPT prompts, or juicy tips, let me know.