Microsoft CEO Satya Nadella told employees Wednesday that Anthropic’s limits on requests that users submit to the startup’s high-end Fable artificial intelligence model don’t make sense.
The comments come as executives express interest in cost-efficient models that don’t come from the most well funded labs can handle software development and other tasks inside companies. On Thursday Chinese startup Moonshot AI announced an open-source model that it said surpasses recent releases from Anthropic and OpenAI.
“If you use Fable, when it refuses for any random thing, it just is like, when was the last time you had a creation tool that was so editorially controlled?” Nadella told engineers working on Microsoft’s Copilot AI software, according to a copy of his remarks that was provided to CNBC. “It doesn’t make sense.”
Microsoft declined to comment. An Anthropic spokesperson did not immediately respond to a request for comment.
When end users ask Fable about some aspects of creating large-scale models, among other topics, Anthropic might send responses from an older version, according to a support page. Some people have called out the rejections on social media.
Anthropic said when it announced Fable 5 in early June that it was attempting to reduce false positives for blocked requests. Three days after the introduction, Anthropic cut off Fable access to comply with a U.S. government export control directive, and on July 1 the company restored the model, saying “the new safeguards will flag a slightly higher fraction of harmless requests than the previous Fable safeguards.”
The Microsoft chief’s remarks represent criticism of a valued partner and client. Anthropic’s Claude Code software development tool has become popular among programmers and people with less technical talent. In November Microsoft said it was making a $5 billion investment in Anthropic, as the startup agreed to spend $30 billion on Microsoft’s Azure cloud. This year Microsoft unveiled Copilot Cowork, a business productivity assistant that draws on the startup’s models.
Investors have worried that Microsoft could face disruption from models that quickly write software, as the company allocates tens of billions per quarter to data center expansion. Shares have fallen 17% so far this year, while the Nasdaq Composite index has gained 11%.
Lately Nadella has argued that companies should be able to cost-efficiently develop custom models and draw on internal data, without letting it flow out to other entities, such as companies in the business of building models. In a Sunday blog post, he invoked Palantir CEO Alex Karp, who said on CNBC that technical organizations “want to know they own the means of production.”
Microsoft offers the Foundry service where developers can adopt over 11,000 models, including some from Anthropic and OpenAI.
“It can’t be that there are only two companies in the world with token capital, and everybody else is renting it,” Nadella told the engineers. “It makes no economic sense.” Tokens measure computing usage of AI models.
Microsoft tied itself tightly to OpenAI through a series of investments, but the two companies drifted and became competing with each other after the abrupt 2023 ousting and reinstatement of OpenAI’s CEO, Sam Altman, with little notice to Nadella.
OpenAI said in April it would bring its models beyond Azure to cloud infrastructure leader Amazon Web Services. Microsoft, for its part, announced a series of in-house models, including one for coding, in June. Its stake in OpenAI’s for-profit business was worth $135 billion as of October.
Nadella also said it’s good Microsoft is merging products for consumer and corporate workers. In March, he announced that former Snap executive Jacob Andreou would take charge of Copilot across both categories.
The unification is something “we should have done maybe day one,” he said. In April Microsoft said it had over 20 million paid seats for the work-centric Copilot, or 4% of the cloud-based Office customer base.
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