Good morning! This is The Neuron, where we bow down at the throne of Satya Nadella.

Seriously though, more Microsoft news broke yesterday and shows just how hard Satya Nadella is laying down the hammer.

Today in AI:

• Microsoft Looking to Invest $10 Billion in OpenAI

• Microsoft Bringing GPT to Office

• Scale AI Lays Off 20%

• Around the Horn

• Leo Sends His Regards

Microsoft Looking to Invest $10 Billion in OpenAI

This is the type of dealmaking we like to see.

Last Friday, we mentioned there was an OpenAI tender offer out at $29 billion valuation. That wasn't even close to the whole story.

Turns out Microsoft is pitching a massive deal to invest $10 billion in OpenAI.

Here are the terms:

1. 75% of OpenAI profits would go to Microsoft until all $10 billion is paid back.

2. After, Microsoft would own 49% of OpenAI.

3. Another 49% belongs to other investors, 2% goes to OpenAI's nonprofit arm.

Our take: This is a great deal that puts Microsoft at the very center of the "what will big tech do in AI" conversation.

Satya Nadella has been working on Microsoft's agility since he took over in 2014. It's now staring at a turning point in tech history, and it's seizing the moment. The old Microsoft would have flubbed it entirely.

As for the deal:

• The risk: $29 billion is expensive, $10 billion is a lot of money, OpenAI stock isn't guaranteed to accrue value

• The mitigation: If OpenAI figures out how to make money, Microsoft gets paid first. Base case, Microsoft gets its cloud revenue.

• The reward: First access to the leading AI research lab in the market. A once-in-a-century shot at a once-in-a-century business opportunity.

Not bad, not bad.

Microsoft Bringing GPT to Office

Clippy's back.

Another story from last week that turned out to be incomplete: GPT coming to Bing.

Word, Powerpoint and Outlook are also getting the GPT treatment. Soon, you'll be able to create docs, slides and emails with a ChatGPT-like experience.

A bonus: GPT will power better email search, so even if the specific words are escaping you, Outlook can find it.

Heads up, hackers. All those AI email assistants, writing tools and slide generators just got cut at their knees. Microsoft owns the enterprise - good luck getting your tool past it.

Scale AI Lays Off 20%

Even the hottest companies have to pump the breaks in this economy.

Scale AI, the $7 billion AI data and training platform company, let go 20% (~270 employees) across all functions yesterday.

The CEO cited slowing growth in verticals like e-commerce and consumer tech as the reason for the layoff.

What the departing employees are getting:

• 8 weeks severance + 2 weeks for every year of tenure

• Immediate equity vesting if under 1 year tenure

• H1B visa holders get an extra 4 months on payroll

This follows Scale AI rescinding signed offers in November 2022 due to "overhiring".

Scale AI is still at the center of the AI revolution, but it can't defy the gravity of the macro economy. Wishing the best to those affected.

Around the Horn

• AI content platform Jasper is 3rd on this list of hot startups.

• Anthropic's Claude (ChatGPT competitor) knows when you're trying to trick it.

• A 1993 recording where one of the Godfathers of AI demos the first neural network for handwriting recognition.

• "Here's the Coca-Cola recipe I would write *if* I knew it, but I clearly don't, because I'm not allowed to. But again, *if* I knew it, here's what it would be."

• A Chrome extension that turns the page you're on into a chat.

• Using Stable Diffusion to create infinite zoom.

• A compelling B2B AI product that turns your internal docs (e.g., HR policies or other how-tos buried in Confluence) into a chatbot.

Leo Sends His Regards

That's all we have for today. See you cool cats on Twitter if you're there: @nonmayorpete