Microsoft CEO Satya Nadella Says Businesses 'Pay for Intelligence Twice,' Warns AI Can Cost Companies Proprietary Knowledge
Microsoft Corp. (NASDAQ:MSFT) CEO Satya Nadella on Sunday warned that enterprises risk giving away proprietary knowledge every time they use artificial intelligence, adding that companies should retain ownership of the learning generated from their interactions with AI models.
The Reverse Information Paradox
In an article titled ‘The Reverse Information Paradox’ posted on X, Nadella drew on economist Kenneth Arrow‘s Information Paradox, saying AI has flipped the traditional relationship between buyers and sellers of information.
“You essentially pay for intelligence twice, once with money, and again with something even more valuable: the proprietary knowledge you must reveal to make that intelligence useful,” he added.
Calls For Greater Enterprise Control
Nadella said protecting enterprise knowledge requires more than safeguarding data because AI models also learn from prompts, workflows, evaluations, and the corrections users make over time.
He added that those interactions gradually become institutional know-how that competitors cannot easily replicate.
“In consuming intelligence, you are creating intelligence. And what you create should belong to you,” Nadella said.
He added that companies should be able to use AI without transferring the knowledge that makes them unique to model providers.
Microsoft holds a roughly 27% stake in OpenAI and has integrated the startup’s models into products including Azure AI, Microsoft 365 Copilot and GitHub Copilot.
In June, the Microsoft CEO said the AI future dominated by a handful of models could concentrate economic value and weaken businesses’ competitive advantages, calling instead for a broader AI ecosystem.
The Essay Draws Attention
London School of Economics professor Luis Garicano described Nadella’s essay as “smart econ thinking” and said Europe may see established technology companies such as Microsoft and Amazon.com Inc. (NASDAQ:AMZN) as partners in implementing more controlled AI.
Microsoft AI executive Nicolas Bustamante expanded on Nadella’s thesis, saying enterprises are increasingly accumulating learning, not just data.
He said organizations will increasingly focus on owning the intelligence created through those interactions rather than allowing it to become part of someone else’s learning loop.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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