Microsoft CEO Satya Nadella Exclusive Interview AI Led Business Will Add To 5T Indian Economy

Satya Nidhara, it's always great to have you join us here. It's great to see you back in India. Thanks very much for your time. We were here in this same room exactly a year ago, Satya, where the big breakout moment for CHAT-GPT had happened, and I know you were excited about it. But in the last 12 months, it's almost as if no one can talk about anything else but AI, whether it addresses climate change or cancer. It's this sort of elixir that everyone's talking about between the headlines and the hyperbole. Where are we in the journey today? And more importantly, over the next five years, where do you believe we will be? No, first of all, Srini, it's fantastic to be back in India and to be with you. And you're right, I mean, a lot has happened even since last year. I was very excited about sort of the prospect of what AI could mean. I was very stunned even at that point, seeing how some of the leading model work we had done was diffusing in India, and even in something like the public sector, right? That is the first time I saw the Jugal Bhashani demo coupled with GPT-4. And I was like, really, it was a drop-the-mic moment for me. And to come back a year after, and we're no longer just talking about AI. I mean, some of the use cases I talked about this morning, I saw from customers, commercial customers, nonprofit organizations, I think this is the fastest rate of diffusion of anything new I've ever seen. And to your point, why is this excitement? Because I think it's tangibly changing economic productivity, whether it's for software development, frontline work in retail and healthcare, whether it's access for a citizen or a rural, say a new immigrant into the urban area in India to be able to access services. I've not seen a general purpose technology like this that can have that type of broad impact. And that's where I think the excitement comes from. Well, speaking about the excitement, Satya, you know, let's also talk about the disruption because while we are talking about productivity gains and what this does to workflow, what will it do to workforce is the question. And, you know, where do you stand on that? Yeah, first of all, I think, you know, at the core level, I think we should not, you know, we should sort of go back to the lump of labor fallacy. I think labor markets are a lot more dynamic than we give them credit to. But at the same time, we should be clear-eyed about any displacement. So a couple of things that we can do. One is skilling. One good thing about this generation of AIs is it actually reduces the learning curve, not increases the learning curve. So even for somebody displaced mid-career, you can pick up new skills faster, easier. So that's sort of one. The second thing it does is it's sort of, if the previous era was about information at your fingertips, I think of the AI era as expertise at your fingertips. So you can take somebody who's in the front line, whether it's in retail or whether it is in healthcare, it perhaps will even improve the wages because they are now able to give more expert health advice or more expert work is being done by non-experts. They may have domain expertise, but they may not have all the knowledge. And so therefore, I think that there could even be better wage support in new jobs. One of the coolest examples I saw right here in India, in fact, it sort of incubated in MSR. And after that, the founder of Carrier took it and created Carrier, which is about taking AI jobs. These are new jobs that didn't exist around labeling data and what have you, that are now being essentially syndicated out to rural India, where women mostly are able to find wage support, better wages, 20 X wages, compared to what is the general wage for doing AI jobs. So I think we will have new jobs. We'll see your ability to go up. The learning curve will be faster and better and even better wage support for some of the things that are in the frontline. But in the short term, do you believe that we are actually going to see more job losses than we do see job creation? Because we've already started to see companies talking about restructuring on account of adopting AI. Yeah, I think that what is happening, some of it is just adjustment. I think this is where I think, as I say, labor markets adjust, right? If you take software development, the reality is there is a need for more software developers all over the economy, not just in the tech sector. So that's where I think, if there is one sector that's getting quote unquote more efficient, some of the labor force in that sector will disperse more broadly, I think. So I think that, yes, I'm not at all saying that there is not going to be displacement. Like with any new technology, we've seen it. But I also am very optimistic that we even have both the policy tools and the actual tools to help us manage this transition in a net positive way for even a country like India. Speaking about managing this transition, what is it going to mean in terms of investments, Satya? At a company level, let's talk about Microsoft. You did talk about disproportionately investing in building out AI across your tech stack. And for the industry in general, what are we talking about in terms of investments? Yeah, so for us, we are obviously very, very excited by what we're seeing in India. At the end of the day, we are putting our capital, we are building out our own data centers, we have four regions, we'll keep expanding that. We're investing in our own people here, both India as a source of human capital that's producing products for us all over the world, but also us helping customers, the IT services companies that serve the world from here, equipping them with the latest and greatest. So that's, I think, I would call it the core of what we do. But beyond that, I would say the investment here is, if you have a new general purpose technology, India has a tremendous opportunity to use it in a broad sectoral way, public and private sector, across every industry, healthcare, retail, energy, what have you. We want to make sure that we are there. You know, I'd like to tell you, we talk a lot about co-pilots, and I want us to be the co-pilot for India as it really takes advantage of AI, creates, in fact, its own AI products across all of these sectors, and exports them to the world. Do you have a number, though, of what it will take for Microsoft to invest here in India? And also, what Indian companies will need to do in terms of further investment? The economic data I've seen is, if Indian economy is going to be, let's say, 5 trillion, the AI-driven part of it could be something like maybe 10% of it, maybe 500 billion of it. So what we are going to do is, and all of that is being powered by things like cloud compute with these frontier models, open-source models, small-language models, and so on. And so our capital investment and human capital investment will really fit into that. So the way I think about it is, if Microsoft has X revenue inside a country, that means there needs to be 99% more revenue created because of the output of compute. And so that's kind of how we'll invest. You know, I want to talk about open AI and, of course, your partnership with open AI. Sam Waltman has said it's one of the greatest tech bromances. But, you know, how do you de-risk yourself? I know that you've said you're not really interested in what the board seat does for you, but obviously you do want to ensure that there is stability as far as open AI is concerned. How do you de-risk yourself from a commercial perspective? Have you renegotiated your commercial terms, for instance? Do you intend doing that? Yeah, I mean, first of all, I've grown up in a company that has always created lots of enterprise value by partnering and partnering well, right? I grew up in a company that, you know, where Microsoft and Intel really brought together the advances that Intel made and what we did with Windows. Same thing with SAP. In fact, I built our database business in partnering deeply with SAP. So at some level, this is core to us. And so the latest example of that is what open AI and Microsoft have been able to do. So we are very, very comfortable with the partnership, what it has achieved to date. Of course, we want stability in open AI. We are very excited about the new board. We have an observer seat. We really are not, you know, we were comfortable before and we are comfortable now. And at the end of the day, we want to be good partners where open AI can succeed with us and we can succeed with open AI. But more importantly, at the end of the day, it's our customers and partners who rely on the two of us, just like how the PC revolution was created by Intel and Microsoft. We hope the open AI, Microsoft relationship creates the AI revolution. You said you're waiting for competition. Where do you believe competition is going to come at you from? It's going to come from everywhere, right? You know, I think that all of our big tech peers are, you know, fast at work on all of this. And it's fantastic. I mean, therefore, one of the things that is, I think, understated is competition amongst big tech players. I think it's very healthy, right? When you have all of the folks competing with each other, that means it's creating a real opportunity for the world to benefit. New entrants, right? Always, whenever anyone gets excited about sort of the existing incumbents, you have to watch out for new entrants. And open AI is a great example. After all, open AI wouldn't have existed. But for our support early on, but they're a very credible company today. And we are excited to be able to sort of really be playing our part in it. Satya, let me end by asking you, a decade now at Microsoft, at steering things at Microsoft, and it's a very different company in so many ways. Three trillion in market cap to just start with. What are you proudest of over the last 10 years of the changes that you've been able to achieve? And more importantly, what do you see as being the engines that will drive Microsoft from here on? It's a great point, Shireen. In fact, the way I count my time is this is my 32nd year at Microsoft and my fourth big platform shift, right? I was lucky enough to be part of the PC client server, the web internet, mobile cloud, and now AI. And this is year two of AI. If anything, I'm going back in time to your point of learning from what was it like when year two of the PC revolution, year two of the browser, year two of say the cloud, and ensuring, and the lesson I learned is you got to really take the new tech, lean in completely, democratize it, and have innovation, right? Because at the end of the day, there is no franchise value in our business. What matters is can you see, long before it's conventional wisdom, can you really make it to the other side and then really create that platform? And that's what I'm excited about. Satya Nadella, always a pleasure. Many, many thanks for joining us on CNBC TV18. We wish you the very best and we look forward to seeing you back here in India. Thank you so much, Sri.