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On Sunday, Microsoft CEO Satya Nadella doubled down on the shocking warning he issued earlier<\/a> this month to businesses that use AI, taking it a step further this time. Companies that rely wholly on the proprietary AI labs for their AI needs ultimately won\u2019t survive, he predicts.<\/p>\n That\u2019s what he said on CNN\u2019s \u201cFareed Zakaria GPS.\u201d<\/a> When Zakaria asked Nadella to explain what constitutes a company sharing too much with an AI model provider, Nadella said businesses need to be wary of everything they hand over, from their data to their prompts.<\/p>\n Nadella called for a setup where \u201cevery time you use the model, all of the metadata around it is retained by you, so that you could use all of that to train perhaps your own weights or your own open model.\u201d (Weights are a model\u2019s trained parameters \u2014 essentially its brain. Nadella\u2019s point: Companies should hold on to their own usage data so they can eventually build a model of their own.)<\/p>\n \u201cAny firm that doesn\u2019t have this control, I will claim will not remain a firm because you\u2019ve essentially outsourced your thinking,\u201d he added.<\/p>\n In short: Companies without their own models \u2014 or without a layer of AI infrastructure known as AI gateways to separate their prompts from the model itself \u2014 will be in trouble, Nadella says.<\/p>\n He specifically wants companies to stop relying on AI labs\u2019 built-in coding tools, known as harnesses.(Anthropic\u2019s Claude Code and OpenAI\u2019s ChatGPT Codex are examples of these.)<\/p>\n \u201cBy keeping the harness separate from the model and the context and memory separate from the model, you absolutely can use multiple models for what they\u2019re great at. At the same time, any one model can go away, and you can still continue to be in control of your own destiny,\u201d Nadella said.<\/p>\n Mind you, Microsoft is an investor in the two largest AI labs, Anthropic and OpenAI. Coding agents are a particularly popular way for enterprises to use AI models and by all accounts are earning the model makers gobs of money<\/a>.<\/p>\n And yet, Nadella is telling enterprises not to rely too heavily on them. Microsoft, naturally, would benefit from that warning, as its cloud business is now also selling the kind of alternative infrastructure he\u2019s recommending.<\/p>\n Despite the obvious self-serving fear tactic, he\u2019s not wrong. Enterprises are increasingly realizing that they need many model options, particularly cheaper options, and are turning to open-weight models<\/a> \u2014 models whose underlying code is publicly available \u2014 that they can fine-tune and run on their own hardware. That, in turn, means they will also need ways to manage multiple models, as well as coding agents that aren\u2019t tied to a specific model provider.<\/p>\n But Nadella\u2019s observation isn\u2019t just about runaway budgets. He anticipates that once a company has \u201coutsourced its thinking\u201d to a model, there\u2019s little to stop the AI lab from eventually offering a competing service of its own. This risk grows as enterprises adopt AI agents and give them access to the innards of the company.<\/p>\n It\u2019s the kind of warning that the startup industry has been shuddering about for years: What\u2019s to stop model makers from wiping out startups by copying and competing with them?<\/p>\n In May, for example, when OpenAI CEO Sam Altman offered to invest in every Y Combinator startup<\/a> in its latest cohort by offering them AI credits, seed investor Jason Calacanis issued a similar buyer-beware, posting: \u201cIf you take these tokens, there\u2019s a non-zero chance that OpenAI will study exactly what your startup is doing, copy your idea and put your app into their free offering. This is the classic platform playbook \u2014 be careful, founders!\u201d he posted.<\/p>\n Now Nadella is making that same case to enterprises.<\/p>\n One caveat: Nadella\u2019s concern about oversharing with AI models applies only to businesses \u2014 not individuals. When Zakaria specifically asked Nadella how everyday people could protect themselves, Nadella shrugged it off, saying that sharing data is simply the price consumers pay for using a service, especially a free one.<\/p>\n \u201cTo some degree there\u2019s got to be some value exchange in the consumer space where you\u2019re getting something for free, maybe for your data. That\u2019s sort of how the advertising business model has worked,\u201d Nadella said. <\/p>\n<\/div>\n When you purchase through links in our articles, we may earn a small commission<\/a>. This doesn\u2019t affect our editorial independence.<\/em><\/p>\n