Satya Nadella arrived at the World Economic Forum in January ready to talk up his triumphs in artificial intelligence, when a dangerous threat emerged. A little-known Chinese startup named DeepSeek had just released an AI model that quickly became the talk of Davos, Switzerland. Nadella, the chief executive officer of Microsoft Corp., gathered his lieutenants to assess the out-of-nowhere competition. They set up a virtual war room on—where else?—Microsoft Teams to coordinate a response. The new model, DeepSeek-R1, could deliver results roughly on par with those of OpenAI at a fraction of the price. Computer processing that would cost $1,000 through OpenAI ran for just $36 through R1. Even crazier, DeepSeek made R1 open-source, meaning anyone could install versions of it for free if they had a powerful enough computer. “OpenAI has been so far ahead that no one’s really come close,” Nadella tells Bloomberg Businessweek. “DeepSeek, and R1 in particular, was the first model I’ve seen post some points.” Nadella’s primary allegiance now isn’t to OpenAI’s very expensive skunkworks. His ultimate objective is to sell whatever AI his customers might want through Microsoft’s platforms. Nadella had spent three years running various parts of the company’s cloud business, called Azure, before he became CEO in 2014, and that’s now central to his AI strategy.

Full insight : Microsoft’s CEO, Satya Nadella’s take on future of AI, jobs and Microsoft’s relation with OpenAI.