Microsoft mulls AI pricing

In today’s big story, we’re looking at Microsoft considering a pricing overhaul of its suite of software tools. It’s a bid to get a return on its AI investments.

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The tech giant is considering overhauling the pricing plans for Microsoft 365 — its widely used suite of productivity tools — by including AI features and creating a more expensive bundle, Business Insider’s Ashley Stewart writes.

Microsoft executives are set to discuss plans this summer. The goal is to decide before September, when sales ramp up.

The potential changes stem from Microsoft’s desire to see a return on the billions of dollars it has invested in AI. From millions of pricey AI chips to an ambitious plan to expand its data center footprint, Microsoft has bet big on the future of AI.

Its AI investments have already paid off to a certain degree. Microsoft hit a $3 trillion valuation for the first time this year and is the world’s most valuable company. An early investment in OpenAI gave Microsoft a massive advantage with the onset of the generative AI boom.

But AI tools aren’t cheap to maintain, so figuring out a way to drive revenue from them, and fast, remains key.

Microsoft 365, one of the company’s crown jewels, is an obvious place to start. Users can already add the Copilot AI assistant tool to the Microsoft 365 suite for an additional cost. Packaging it together could save users the headache of managing multiple software licenses.

Microsoft might have been comfortable pouring more cash into AI bets during the zero interest rate phenomenon. But in the wake of Big Tech’s “Year of Efficiency” in 2023, the purse strings have gotten considerably tighter.

Now, even a company near the top of the AI hierarchy closely monitors the bottom line. Case in point: Microsoft made cuts in its Azure cloud business due to its AI pivot.

And this is the most valuable company in the world!

What about the AI startups that raised millions in funding without much more than a hunch of a good idea? How much grace will they be given before investors expect returns?

Some seem to realize runways are getting shorter. Take OpenAI, which made two high-profile hires to serve as chief financial and chief product officers.

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2. China puts the brakes on its gold-buying spree. The country’s central bank bought gold for 18 straight months. But as the commodity reached record-high prices, China held off on scooping up more.

3. Boring stocks are poised for a “renaissance” rally. Large-cap value stocks are set to outperform growth stocks for the first time in a long time, Bank of America predicts. They recommended four sector ETFs to take advantage of the opportunity.

2. Nvidia is going on the defensive. Big Tech and startups are trying to get a slice of Nvidia’s market dominance. According to a note from Morgan Stanley analysts, Nvidia is “clearly focused on defending market share.”

3. OpenAI and Sam Altman might be the biggest winners of WWDC. Apple’s AI announcements may not be enough to attract new Apple customers — but ChatGPT’s integration is a huge endorsement for OpenAI and its CEO, providing it access to a massive new user base.

2. Elon Musk wants to win over advertisers (again). Musk has had a tenuous relationship with advertisers since giving them the proverbial middle finger last year. He’s now set to speak at the Cannes Lions ad summit, where Big Tech firms go to woo advertisers.

3. We’re witnessing the biggest AI deal yet. While Apple has announced its integration of ChatGPT with Siri, one Apple exec said there could be a similar deal with Google Gemini. BI rounded up what we know on who’s paying who — and what’s at stake.

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Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. George Glover, reporter, in London. Annie Smith, associate producer, in London.

Get in touch. Email us at insidertoday@insider.com

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