Satya, what brings you here to Germany?
You know, it's our AI tour today in Munich and I'm excited to be here.
Is it more difficult these days to come here and be in Germany and answer questions?
I mean, it feels like the atmosphere has changed a little bit. There's more skepticism. There's some governments in Europe even thinking about only allowing European tools. There's even a supermarket giant that's developing their own cloud.
Well, I mean look, you know, first of all, I think there is real reason for why there is competition always. There is local competition. There is multinational competition and we welcome that. And I think what Germany and what Europe deserves is great innovation both coming out of this region and from the rest of the world because in fact when I look at Europe and look at Germany, in fact I always describe it, you know, whenever I am in a jeweler in the United States or when I'm at the dentist I see the German Mittelstand and its excellence. And so the world I think will remain a connected world where the innovation from any region reaching the other regions is going to be the true sign of progress.
But you sympathize. You can understand that some German or European companies are a little worried these days.
I mean I first of all I think that any country should sort of think about how should they think about their own innovation agenda, their own competitiveness, their own sovereignty. That's the topic of the day today. And I talked about this even today in my talk which is how one can take all the options. For example, if you look at it right, we are definitely an American company. We're a multinational company but we have significant capital that we have invested in Europe, in Germany, putting our capital at risk so the German companies can use it and then create more value right so it's not like we're coming here with just software we have both innovation and investment here locally and we have all the sovereign options right you have the ability to manage your own keys you can encrypt your data you can have confidential computing you can even have private cloud options and we have even local partners and so in some sense I think as long as one takes the approach that look at the end of the day if you want to manage risk you manage it using a portfolio like everything else in life and then to be able to think about it in clear ways and say at the end of the day Germany needs to have sovereignty and also produce things out of Germany that get exported around the world and we can be a great partner for that.
All right, maybe briefly on your career it's amazing. I mean when you started as CEO in 2014, the company was 10 times less valuable than today and you I think increased the revenue by a factor of five or six. Amazing numbers.
Look, look at the end of the day, what matters the most is what happens next as opposed to what happened in the past and if I sort of had to recount how is Microsoft not just in my tenure or whatever 12 years but what's the real question is what is it that after 50 years after our formation here we are in 2026 and going at it. And the fundamental thing to me is having that sense of purpose and mission that allows us to be relevant going forward and a culture that allows us to build the capability right even take the thing that we're talking about in AI it was back in what 2019, 2018 when we decided that there was going to be essentially a new regime of AI innovation and see it long before its conventional wisdom.
Is it true that you invested in OpenAI in 2019 I think for the first time and Bill Gates was not a big fan of that?
I think we've, Bill has talked about it. I've talked about it externally and I mean after all you know who would have thought in 2019 that there is a smart idea to go put a billion dollars. Everybody thought we were just burning a billion dollars. And so you know it turns out some of these things when they work they are celebrated and when they don't work nobody knows about it. And so therefore, look, at the end of the day, I'm more like the thing that we were obsessed about and Bill in particular was obsessed about was natural language, right? I mean, throughout our history from the beginning days of Microsoft research was can we really have AI breakthroughs in natural language. And so when the OpenAI team started pivoting from what at that time they were doing a lot more RL and what have you. Interestingly enough they switched to natural language and scaling laws. And that's when we sort of picked it up and rest is history.
I mean there's the legend that you met Sam Altman at Sun Valley at the conference. What did you see in him after the first meeting that in the end made you make this investment?
You know I've known Sam for a lot longer than that. I met him, you know, maybe in, you know, when he was in his first startup. And so it's not that I ran into him in Sun Valley for the first time. Okay. So, I've known Sam for a long time. And quite frankly, some of the other founders of OpenAI and what have you. And I think I mean, fundamentally, interestingly enough, I think the paper that was originally written was even written by I think Dario when he was at OpenAI on scaling laws. And so, you know, look, I think it's a fantastic team they assembled. they had real belief in scaling. And then we thought that we can be great partners. And so and we went all in and it's been great for them and for us.
Are you sometimes concerned we are still in an AI bubble though?
You know look I think it's at the end of the day there's only one thing that matters right which is it's not about talking endlessly about the technology. It's about seeing that technology in the real world having real impact. Right? I come here to Munich and I sit and sort of listen to a startup out of Munich that's building one of the world's best customer experience, Parloa, right which is fantastic you see they're building they're winning share right that's great to see talking about German innovation which is not obviously born in Germany but winning world over and they are partnering with us or they go the other extreme and say you see the Munich fire department using AI to get better at their emergency transfers. Right? To me, the bubble is a bubble if you don't have these examples of diffusion.
I give you an example for when I thought it's might be a little bit overhyped. The three most important German companies, SAP, Deutsche Telekom, Siemens, they're all together less valuable than OpenAI is these days. Is that real?
Well, I mean I think at the end of the day there is going to be more of a broadening of the economy.
In fact, if anything, in the fullness of time, right, if what is AI going to do? AI is going to do two things. One is if you think about it, it's a real physical investment, right? After all, you brought up Siemens, right? I think Siemens is going to be one of the largest suppliers of a lot of the equipment that goes into data centers. So I think Siemens is going to be a major beneficiary of what is going to be the buildout of AI not just in Germany but world over right and so there is going to be a and energy is going to be a massive requirement so I think there's going to be a broadening of the supply side of it then on the demand side right as it gets used it's going to create surplus it's going to create local surplus whether it's in the health outcome or whether it's in the public sector efficiency or what have you so ultimately there should be and will be GDP growth right That's the real test of any of this.
Pure valuations is staggering.
Valuations are look at the end of the day, you know, stock markets work because people are really looking at what the forward earnings potential of anything is. And it's sort of like, you know, in the short run, it is what is it that Warren Buffett thing, right, which is it's a voting machine and in the long run it's a weighing machine. And I'm not going to comment on stock prices and valuations. that's for investors to make sense of but what I think of is an all-up economy benefits from new general-purpose technologies lifting all boats when it comes to productivity and this is what's happening.
Do you think there's like some new breakthrough innovations in AI is there something after the transformer models on the frontier already?
Yeah I mean this it's a good great question right when I think about even it's not no longer just one transformer model I mean if you look at you know where we've, oh, it was all about pre-training scale. Then it was about post-training. Then we came up with reasoning. Then we said, oh, there's RL. And so there's constant innovation that's happening even in what is considered transformers and transformer architectures. There is obviously going to be I always say that we are one sort of innovation away from the entire regime changing even in terms of what's a new model architecture that could even be more efficient in its performance and so I think we have to be very open-minded about it.
I brought three five years out questions. The first one is in five years out will there be vast amounts of people without a job?
I think it's going to be one of the biggest questions for us is how does work, work artifact and workflow change. So let's take software development right because after all this is the place where it all started right in fact my own belief in this particular transformer models and its scaling properties was you know reinforced when I saw next suggestions in GitHub Copilot. If I look at what's happening with software development right and if in fact if you look at even the history of software development you know at least you know I started learning with assembly and then compilers came and then we went to higher level languages. We went to interpreted languages and we've had you know many many tool chain changes and levels of abstraction that made us more productive. This one is another big leap forward in making it possible for both reducing the floor and raising the ceiling for anyone who is a software developer. Right? What does it mean reducing the floor? Anyone can be a software developer just like how Excel reduced the floor for anyone to be an analyst. Now anyone can be a software developer but it's also raising the ceiling on oh what is the new sophistication you need in order to be productive with these new tools so that these code bases that are getting generated are not black boxes that's going to be what all of us will have to reskill ourselves on so to me what I think is more important in the short run I'm not saying that there is not going to be displacement we have to be clear-eyed about it what's the best protection against displacement It's to one understand the new medium, the new tool, the new skills required and transform yourself in job and that is what's happening in software development and you can see it where software developers are getting more productive the IT backlog is huge.
I totally buy it for the software developers bubble or that industry but I mean there's talk about like whole economies.
