It's the new rivalry in the American tech world.
That's the battle between Elon Musk and software giant Microsoft against the backdrop of who will dominate the artificial-intelligence revolution, or AI.
The broader AI arms race sees all the Big Tech groups and startups compete to play leading roles in this innovation, which in the coming years will shake up all industries.
Everyone in Silicon Valley wants a slice of the pie. The Redmond, Wash., company has invested more than $10 billion in OpenAI, valuing the company at more than $29 billion. This investment made Microsoft the largest shareholder in OpenAI and gave it access to the AI advances the startup has made.
One of OpenAI's success stories is ChatGPT, a conversational chatbot that won over the general public worldwide when it was launched at the end of November.
ChatGPT ended up convincing the skeptics that AI was a revolutionary technology. Satya Nadella, CEO of Microsoft (MSFT), even speaks of a "paradigm shift." There will be a before and after ChatGPT, experts say.
AI as a Bone of Contention
ChatGPT completely disrupted the search-engine industry, which up to now has been dominated by Alphabet's (GOOGL) Google.
The big change is that now, when consumers submit their queries using Microsoft's Bing, they will receive exact answers to the questions asked, instead of the current collection of links. Up to now, a user has had to scan the links and click on the ones that most likely would answer the question posed. The robot can also perform extremely complex tasks such as, for example, writing a book.
After its big investment in OpenAI, Microsoft immediately incorporated ChatGPT features into its Bing search engine and added the technology -- large language model -- that powers ChatGPT to its Microsoft 365 business software (Word, Excel, PowerPoint, Outlook, etc.).
Musk feels as if Microsoft improperly took something that is rightfully his. Musk, who is building his own AI platform -- TruthGPT -- objects to Microsoft turning the efforts of OpenAI, a startup in which he was an early investor, into a big source of revenue and profit.
"ChatGPT is entirely housed within Microsoft Azure," the billionaire said in March, referring to the company's cloud services. "When push comes to shove, they have everything, including the model weights."
The entrepreneur has just escalated the conflict with Microsoft. In a letter sent by Alex Spiro, a partner at Quinn Emanuel Urquhart & Sullivan who is a lawyer for Musk and Twitter, Musk accuses Microsoft of having used Twitter users' data in an unauthorized way and of not having told the social network, thus violating the contract between the two companies.
"Our recent review of Microsoft’s activity on the Microsoft Apps indicates that Microsoft may have been in violation of multiple provisions of the Agreement for an extended period of time," Spiro wrote in the letter sent to Microsoft's CEO, Satya Nadella, on May 18.
The agreement to which the lawyer refers regards use of Twitter data.
Did Microsoft Violate Agreement with Twitter?
When Musk became the owner and CEO of Twitter in late October, the platform began charging for use of its application programming interface.
The API enables developers to embed tweets into their software and services. Above all, the API gives them access to Twitter data, which is a huge resource for learning about consumer habits and developing products and services that meet their needs.
Before Musk, Twitter gave certain partners and developers free access to its API as long as they agreed to respect certain rules. Twitter API-driven apps include Hootsuite, Sprout Social and Sprinklr.
Microsoft, which had free access to the API before Musk, refused to comply with the new rules Musk imposed.
"Microsoft has used Twitter’s standard developer APIs free of charge in order to benefit from Twitter’s data and services in key Microsoft products that generate tens of billions of dollars in revenue for Microsoft annually," Spiro argued. "Up until last month, when it declined to pay even a discounted rate for continued access to Twitter’s APIs and content."
Xbox One Social, Bing, Microsoft Azure, Microsoft Power Platform low-code application-development tools and Microsoft Ads are the Microsoft products and services that last month still used the Twitter API, according to Spiro.
The agreement between Twitter and Microsoft prohibits extensive use of the Twitter programming interfaces or circumventing them.
"Despite these limitations, the Microsoft Apps accessed Twitter’s APIs over 780 million times and retrieved over 26 billion tweets in 2022 alone. Indeed, for one of the Microsoft Apps, Microsoft’s account information outright states that it intends to allow its customers to 'go around throttling limits'," Spiro said.
He continued: "Microsoft also appears to have used the Twitter API for unauthorized uses and purposes. The Agreement makes clear that Microsoft was obligated to disclose and obtain approval for its intended use case for each Microsoft App, and to notify Twitter of any substantive modification to those use cases."
A spokesperson for Microsoft told TheStreet: “We heard from a law firm representing Twitter with some questions about our previous use of the free Twitter API. We will review these questions and respond appropriately. We look forward to continuing our long-term partnership with the company.”
Musk and Twitter are asking Microsoft to provide them with information about the nature of Twitter content available to it and how Twitter data has been and is being used. The software giant has until June 7 to respond to this request.
"We remind you that the terms of the agreement require Microsoft to provide its 'full cooperation and assistance' with the requested compliance audit," Spiro concluded.
"We look forward to your prompt and full cooperation in this matter. Please provide a date certain by which Microsoft will provide the requested information, and, in any event, no later than June 7, 2023."
You can read Spiro's letter in full here.
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