This analysis was first published in SvD Näringsliv, in Swedish, on January 17th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
Never underestimate Microsoft. That is the lesson many in Silicon Valley are learning right now. Satya Nadella’s masterstroke has put the M back on the map.
“FAANG.” In the 2010s, it was the only acronym that mattered in tech. It stood for the first letters of Facebook, Apple, Amazon, Netflix and Google.
A few years on, the acronym has become “MAAMA.” Two companies have changed their names — Meta (formerly Facebook) and Alphabet (formerly Google) — while Amazon and Apple remain. Netflix has shrunk and dropped off the list entirely.
What is left is one letter: M. M as in Microsoft.
The dominant tech company of the PC era has been on a long journey. Early in the internet age, competition regulators came down hard on it for using its browser, Internet Explorer, to entrench its dominance. That opened the door to rivals — Firefox, Google Chrome, Apple’s Safari.
When PCs gave way to smartphones, Microsoft failed to launch a successful mobile operating system. The Nokia acquisition was expensive and went badly. Bing never achieved verb status the way Google did. For a while, it seemed as though Microsoft dominating anything on the internet was a distant prospect.
But behind the scenes, the picture looks quite different.
If you visited any websites today, there is a reasonable chance they were served by Microsoft’s cloud platform, Azure. Microsoft is the second-largest cloud provider in the world, just behind Amazon AWS — and more than twice the size of Google Cloud. Office subscriptions (Microsoft 365) are popular. Xbox with its Game Pass subscription likewise. Add Windows and the social network LinkedIn, acquired in 2016, and an entirely different kind of company emerges.
The architect of this transformation is Satya Nadella — Microsoft’s CEO since 2014. He was the third person to hold the role since the company’s founding in 1975, taking over from Steve Ballmer and Bill Gates. The timing was perfect. Nadella led a cultural overhaul to break old habits. The tech boom provided strong tailwinds. Despite the downturn in 2022, Microsoft’s share price has risen more than 560 percent since he took over.
Nadella is now on everyone’s lips because of an investment Microsoft made back in 2019. OpenAI was then seen more as a research project than a proper commercial company, with the stated goal of developing AGI — artificial general intelligence. Put simply, that is when a computer begins to think and act on its own, in a more human-like way.
Microsoft invested a significant sum and, crucially, agreed to run OpenAI’s systems on Azure. Training AI models requires enormous computing capacity and gets expensive fast. By hosting OpenAI, Microsoft absorbed a large part of those costs. In return, it gained a prestigious client, a system that would grow alongside Azure over time — and a relationship with a company sitting on potentially groundbreaking technology that Microsoft could apply across its own products.
The investment attracted little attention until a few weeks ago, when OpenAI launched ChatGPT and took the world by storm. Suddenly, AI became more concrete and comprehensible to ordinary people.
And Microsoft’s 2019 bet looked like a stroke of genius.
The two companies are now reportedly close to a further investment of $10 billion — around 100 billion kronor. The technology could help the Bing search engine become a genuine threat to Google for the first time in its history: a search engine that answers questions, rather than returning a list of links. Google’s leadership has reportedly issued an internal alarm and begun redirecting resources to meet the new competition.
After many years of quiet, the playing field for the tech giants may be about to shift dramatically. And they may soon experience what many learned during the PC era: never underestimate Microsoft.
