By Jeffrey Dastin
REDMOND, Wash. (Reuters) - Microsoft Corp is revamping its Bing search engine and Edge web browser with artificial intelligence, the company said on Tuesday, in one of its biggest efforts yet to lead a new wave of technology and reshape how people gather information.
Microsoft is staking its future on AI through billions of dollars of investment. Working with the startup OpenAI, the company is aiming to rival Alphabet Inc's Google and potentially claim vast returns from tools that speed up all manner of content creation, automating tasks if not jobs themselves.
"This technology is going to reshape pretty much every software category," said Microsoft Chief Executive Satya Nadella, in a briefing for reporters at Microsoft headquarters in Redmond, Washington.
Shares of Microsoft rose 3.2% in afternoon U.S. trading to $265.10 a share.
The power of so-called generative AI that can create virtually any text or image dawned on the public last year with the release of ChatGPT, the chatbot sensation from OpenAI. Its human-like responses to any prompt have given people new ways to think about the possibilities of marketing, writing term papers or disseminating news, or even how to query information online.
Microsoft Consumer Chief Marketing Officer Yusuf Mehdi said at the briefing that the Bing search engine will be powered by AI and run on a new, next generation "large language model" that is more powerful than ChatGPT. A chatbot will help users refine queries more easily, give more relevant, up-to-date results, and even make shopping easier.
Microsoft is now aiming to market OpenAI's technology, including ChatGPT, to its cloud customers and add the same power to its suite of products, including search.
Google has taken note. On Monday it unveiled a chatbot of its own called Bard, while it is planning to release AI for its search engine that can synthesize material when no simple answer exists online.
Microsoft's decision to update its Edge browser will intensify competition with Google's Chrome browser.
The rivalry in search is now among the industry's biggest, as OpenAI sets up Microsoft to expand its 9% share at Google's expense, said Daniel Ives, an analyst with Wedbush Securities.
"Microsoft is looking to win this AI battle," he said in a research note on Monday.
For the quarter ending Dec. 31, Alphabet reported $42.6 billion in Google Search and other revenue, while Microsoft posted $3.2 billion from search and news advertising.
Behind Microsoft's OpenAI partnership is its plan to invest in supercomputer development and cloud support so the startup can release more sophisticated technology and aim at the level of machine intelligence dreamed up in science fiction.
The fruit of this work, however, is more immediate. Last week Microsoft announced the startup's AI will generate meeting notes in Teams, its collaboration software, as well as suggest email replies to vendors using its Viva Sales subscription.
(Reporting by Jeffrey Dastin; Editing by Matthew Lewis)