Microsoft is outsourcing its best AI, tech CEO says — and that's good news for Google

LONDON — Microsoft is handing over the development of all of its best artificial intelligence tools and software to OpenAI, according to one tech CEO — which could be a boon for arch-rival Google.

Todd McKinnon, CEO of identity security firm Okta, told CNBC on Friday that as Google looks to defend its position in search, it is "probably doing the best job of actually not having to outsource their R&D."

He noted that the so-called transformers that power today's generative AI technologies "all came from Google."

Transformers are deep-learning models that learn context and thus meaning by tracking relationships in sequential data, such as words.

"This all came from Google, with DeepMind and the research," McKinnon said. "I mean, the breakthrough was the research from Google, the transformers which are the algorithm that all these LLMs [large language models] are using to make these big advancements."

McKinnon added that there's a risk Microsoft's position in AI becomes reduced to that of a "consultancy." Microsoft was not immediately available for comment when contacted by CNBC.

It comes as a number of the firm's top products — such as Copilot, the firm's generative AI chatbot, and PCs that are equipped with generative AI software — incorporate tech made by OpenAI, the lab behind artificial intelligence chatbot ChatGPT.

Microsoft has plowed billions of dollars into OpenAI, with its total investment to date reportedly swelling to $13 billion. In Jan. 2023, the tech giant said its investment would "accelerate AI breakthroughs to ensure these benefits are broadly shared with the world."

"It's so bizarre," McKinnon told CNBC. "Imagine working at Microsoft. OpenAI is over there making all the exciting stuff. It's almost like Microsoft