Microsoft CEO Satya Nadella warns AI model companies like OpenAI face a "Winner's curse," claiming value lies in platforms and data, not just the frontier model

Microsoft CEO Satya Nadella speaks during an event celebrating the 50th Anniversary of Microsoft on April 4, 2025 in Redmond, Washington.
Microsoft's CEO, Satya Nadella, recently shared some interesting insights on artificial general intelligence. (Image credit: Getty Images | Stephen Brashear)

Earlier this year, OpenAI unveiled its long-anticipated GPT-5 model with major improvements across reasoning, code quality, and user experience. While some believed that the model would constitute AGI (artificial general intelligence), expectations were quickly watered down with some indicating that it shipped with a degraded user experience, glitches, and bugs.

As you may know, OpenAI and Microsoft have been shifting the goal posts as they delve deeper into the AI landscape, seemingly indicating that AGI is no longer the end goal. Instead, CEO Satya Nadella is more interested in delivering real-world impact using the technology, while Sam Altman is locked in on self-replication.

Satya Nadella – How Microsoft thinks about AGI - YouTube Satya Nadella – How Microsoft thinks about AGI - YouTube
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The executive admits that the technology has the potential to drive exceptional growth, but it is still in its early stages. As such, rather than focusing on building toward and achieving AGI, the executive is more inclined toward the technology's human utility.

Nadella revealed that his favorite definition of AI is from computer scientist Raj Reddy because it is very human-centric. “He had this metaphor for AI: it should either be a guardian angel or a cognitive amplifier. I love that. It’s a simple way to think about what this is," Nadella added.

I start with the excitement that I also feel for the idea that maybe after the Industrial Revolution this is the biggest thing. I start with that premise. At the same time, I’m a little grounded in the fact that this is still early innings. We’ve built some very useful things, we’re seeing some great properties, and these scaling laws seem to be working. I’m optimistic that they’ll continue to work.

MIcrosoft CEO, Satya Nadella

But he also acknowledged that the most common definition of AGI brands it as a powerful AI system that surpasses human cognitive capabilities. The conversation evolved into a scenario where an AI research lab unlocks the coveted benchmark with a single model that eventually gets deployed everywhere, with the capability to continuously learn and potentially take over every job in the economy.

Perhaps more interestingly, when asked about Microsoft's response to such a scenario and whether it would let the company capture all the value. The executive responded as highlighted below:

“If there’s literally one dominant model, deployed everywhere, ingesting all the data and continuously learning, then yes: that’s game, set, match. You’d basically stop shop.”

The executive added that the model companies and "scaffolding companies" will need to work together. Nadella said that model companies could be at risk of facing a "winner's curse". "You may have done all the hard work, done unbelievable innovation, except it’s one copy away from being commoditized."

FAQ

What is AGI (artificial general intelligence)?

It is a powerful AI system that surpasses human cognitive capabilities.

Is Microsoft and Satya Nadella interested in AGI?

The executive has been rather vocal about his thoughts on AGI, indicating that he is more interested in delivering real-world impact than chasing the hype. Microsoft AI CEO Mustafa Suleyman highlighted the company's firm stance on delivering powerful AI systems designed to serve humans, not replace them.

When will AGI be achieved?

It is still unclear when AGI will be achieved, but tech leaders like OpenAI CEO Sam Altman predict that the coveted benchmark could be achieved within the next five years, further claiming that it would simply whoosh by with surprisingly little societal impact.


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Kevin Okemwa
Contributor

Kevin Okemwa is a seasoned tech journalist based in Nairobi, Kenya with lots of experience covering the latest trends and developments in the industry at Windows Central. With a passion for innovation and a keen eye for detail, he has written for leading publications such as OnMSFT, MakeUseOf, and Windows Report, providing insightful analysis and breaking news on everything revolving around the Microsoft ecosystem. While AFK and not busy following the ever-emerging trends in tech, you can find him exploring the world or listening to music.

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