microsoft-copilot

How Does Microsoft Copilot Work?

Microsoft Copilot is a security and orchestration layer that enables the company to integrate OpenAI’s technology into its suite of apps.

Right now, an essential thing to understand is you can’t just take OpenAI and push it into a product; you want to create an intermediate layer (a middle layer) between your application and the user, which sets the context to make the AI relevant.

For example, when Microsoft pushed ChatGPT into search, it didn’t do it by simply plugging the OpenAI APIs to search, as this would have had disastrous consequences.

Instead, they built an additional layer that worked as an intermediary between ChatGPT and the Bing AI search experience.

This layer was built for safety and constraints but also to ground the model by leveraging the index Bing has for search.

Similarly, Microsoft’s team has built The Microsoft 365 Copilot System, a processing and orchestration layer to integrate ChatGPT into its applications.

Like Bing AI’s Prometheus, this works as a layer that intermediates OpenAI to search.

The Copilot System is built as a middle layer able to integrate ChatGPT into Microsoft’s apps.

This copilot is made of three elements:

1. Microsoft 365 apps (Word, Excel, PowerPoint, Teams and more).

2. Microsoft Graph (all content and context, like email, files, meetings, chat, and calendars). This is a critical component to ground the model, thus translating the user’s prompt into something more relevant, which makes the app execute commands without hallucinating.

3. And LLM: a creative engine able to parse the text and data to integrate into its apps.

Let me explain this in detail.

If you’re trying to build an app that potentially reaches millions of users or a tool intended for enterprise use cases, this layer is critical to making the app valuable!

It starts with a prompt from you in an app.

This prompt can be about a user asking PowerPoint to generate a slide about any topic.

Yet, that prompt doesn’t directly translate into a command for ChatGPT/OpenAI.

Instead, Microsoft’s copilot takes over, preprocessing the prompt through an approach called grounding.

Put in simple words, (as Microsoft explains) grounding improves the quality of the prompt, so you get relevant and actionable answers.

In that respect, to make grounding possible, the Microsoft Graph plays a key role. In fact, Microsoft’s Copilot makes a call to the Microsoft Graph to retrieve your business content and context.

Take the case of you prompting Microsoft’s Excel to tell you how your company’s sales are doing respective to competitors; if ChatGPT were unleashed without the Microsoft Copilot, it would probably go off to make stuff up.

Instead, Microsoft’s Copilot System intermediates the prompt to tell ChatGPT to access the context (made of the sales data you have) to provide a relevant answer, which is accurate, and it doesn’t make stuff up!

That’s what grounding does; it calls the Microsoft Graph to retrieve your business content and context.

How would this work in practice?

Let me show you how we used a similar approach to build a web app.

Take the case of a user who can talk to an Excel Spreadsheet to ask it questions about the data.

The user might use a prompt like “give me a comparison of sales data between us and our competition.”

That seems a good prompt, doesn’t it?

Well, yes, but it can still generate an inaccurate answer instead of processing the prompt as it is.

Microsoft’s Copilot System translates the prompt into something like

“Access my sales data to provide a comparison respective to competitors, but make sure you use the context in a way that is relevant and accurate, stating only facts!”

This is the prompt that is passed to ChatGPT to provide a secure and accurate answer!

Below, it’s what the process looks like!

In short, you have based on your experience with ChatGPT or Bing chat.

Copilot takes the response from the LLM and post-processes it. This post-processing includes additional grounding calls to the graph.

Thanks to the graph, Microsoft can perform checks, security, compliance and privacy reviews, and command generation.

A good chunk of the intermediation Microsoft does to make ChatGPT prone to be used in its apps is to “reframe” the user’s prompt to ground it based on context (through a graph) so that the prompt is changed in a way that makes it more relevant.

In short, the user doesn’t prompt the apps, but Microsoft copilot intermediates it and translates the user prompting into a relevant one; that is most of the grounding Microsoft does through its copilot.

Sorry if I got too technical, but that is how you build a middle-layer application!

This process is critical either to building consumer-level applications or enterprise-level applications.

Key Takeaways

  • Microsoft Copilot is a security and orchestration layer that integrates OpenAI’s technology into Microsoft’s suite of apps.
  • An intermediate layer is created between the user’s application and ChatGPT to set context and make the AI relevant.
  • Microsoft built an additional layer to integrate ChatGPT into Bing search and Microsoft 365 apps for safety, constraints, and grounding.
  • The Copilot System consists of three elements: Microsoft 365 apps, Microsoft Graph, and LLM (a creative engine).
  • Grounding is used to improve prompt quality by accessing relevant and accurate answers from the Microsoft Graph.
  • The Copilot System translates user prompts into more relevant ones, ensuring secure and accurate responses.
  • Microsoft’s intermediation makes ChatGPT prone to be used in apps, ensuring context-based and accurate results.
  • The process is critical for building consumer-level and enterprise-level applications.

Read Next: History of OpenAI, AI Business Models, AI Economy.

Read Next: Microsoft Business Model, Who Owns Microsoft?, Microsoft Organizational Structure, Microsoft SWOT Analysis, Microsoft Mission Statement, Microsoft Acquisitions, Microsoft Subsidiaries, Bill Gates Companies.

Related Visual Stories

Who Owns Microsoft

who-owns-microsoft
Major shareholders comprise co-founder Bill Gates, who stepped down from the company’s board in 2020, which is why these shares are no longer publicly reported. In 2019, Gates still owned a stake of 103 million stocks, which accounted for 1.34% of the company’s ownership (worth over $23 billion in January 2023). Other individual shareholders comprise Satya Nadella, the company’s CEO, Brad Smith (former president), Jean-Philippe Courtois (EVP), and Amy Hood (former CFO).

Microsoft Financials

microsoft-financials
In 2023, on nearly $212 billion in revenue, Microsoft generated over $72 billion in profits. The company had over $111 billion in liquid assets (which can be easily converted into cash).

Microsoft Revenue

microsoft-revenues

Microsoft Subsidiaries

microsoft-subsidiaries
Microsoft is among the largest companies on earth, with a diversified portfolio. Owned by billionaire Bill Gates, Microsoft acquired other companies like LinkedIn, GitHub, Skype, and more over the years. Today, Microsoft is a tech empire that spans software, social media, gaming, and more.

Microsoft Revenue Per Employee

microsoft-revenue-per-employee
In 2022, Microsoft generated $928,663 in revenue per employee post-mass layoffs, vs. $939,668 in 2021.

Google vs. Bing

google-vs-bing
In 2023, Google’s search advertising machine, generated over 175 billion dollars. Whereas Microsoft’s Bing generated 12.2 billion dollars. Thus, as of 2023, Google’s search advertising machine is over 14x larger than Microsoft’s search advertising machine.

Satya Nadella Net Worth

satya-nadella-net-worth
As of 2023-4, Satya Nadella had 800,667, valued at over $300 million at Microsoft’s current market value. Nadella also got a $2.5 million base salary in 2022, plus $39.23 million in stock awards and over $6.4 million in non-stock incentives, for a total of $48.5 million in 2023. Nadella sold hundreds of millions of dollars of Microsoft stocks in the last ten years, making him a centi-millionaire. In 2023, 95% of Nadella’s salary was performance-based, whereas only about 5% comprised a base salary.

Microsoft Acquisitions

microsoft-acquisitions
Microsoft’s first acquisition in 1987, Forethought, was the developer of a presentation program that would later become PowerPoint. Since then, the company has made an average of six purchases every year, with fourteen of those exceeding the $1 billion mark. Today’s Microsoft business model spans various segments thanks to an acquisition strategy, which saw Microsoft involved in multiple acquisitions.

Microsoft Mission Statement

microsoft-mission-statement
Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With over $110 billion in revenues in 2018, Office Products and Windows are still the main products. Yet the company also operates in Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud, and more.

Microsoft Business Model

microsoft-business-model
Microsoft has a diversified business model, spanning from Office to gaming (with Xbox), LinkedIn, search (with Bing), and enterprise services (with GitHub). In 2023, Microsoft made almost $212 billion in revenues, of which almost $80 billion came from Server products and cloud services, and almost $49 billion came from Office products and cloud services. Windows generated $21.5 billion, Gaming generated over $15.4 billion, LinkedIn over $15 billion, and search advertising (through Bing) over $12 billion. Enterprise (GitHub) generated $7.7 billion, and devices (PC) generated $5.5 billion.

Microsoft SWOT Analysis

microsoft-swot-analysis
Founded in 1975 by Bill Gates and Paul Allen, Microsoft is a revolutionary company in the world of personal computing. The company designs and manufactures software, hardware, operating systems, apps, and devices. Indeed, Windows and Microsoft Office are staples in billions of homes worldwide.

Microsoft Organizational Structure

microsoft-organizational-structure
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time, it also became more hierarchical while maintaining its hybrid approach between functions, engineering groups, and management.

OpenAI Organizational Structure

openai-organizational-structure
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.

OpenAI Business Model

how-does-openai-make-money
OpenAI has built the foundational layer of the AI industry. With large generative models like GPT-3 and DALL-E, OpenAI offers API access to businesses that want to develop applications on top of its foundational models while being able to plug these models into their products and customize these models with proprietary data and additional AI features. On the other hand, OpenAI also released ChatGPT, developing around a freemium model. Microsoft also commercializes opener products through its commercial partnership.

OpenAI/Microsoft

openai-microsoft
OpenAI and Microsoft partnered up from a commercial standpoint. The history of the partnership started in 2016 and consolidated in 2019, with Microsoft investing a billion dollars into the partnership. It’s now taking a leap forward, with Microsoft in talks to put $10 billion into this partnership. Microsoft, through OpenAI, is developing its Azure AI Supercomputer while enhancing its Azure Enterprise Platform and integrating OpenAI’s models into its business and consumer products (GitHub, Office, Bing).

Stability AI Business Model

how-does-stability-ai-make-money
Stability AI is the entity behind Stable Diffusion. Stability makes money from our AI products and from providing AI consulting services to businesses. Stability AI monetizes Stable Diffusion via DreamStudio’s APIs. While it also releases it open-source for anyone to download and use. Stability AI also makes money via enterprise services, where its core development team offers the chance to enterprise customers to service, scale, and customize Stable Diffusion or other large generative models to their needs.

Stability AI Ecosystem

stability-ai-ecosystem

Connected Business Model Analyses

AI Paradigm

current-AI-paradigm

Pre-Training

pre-training

Large Language Models

large-language-models-llms
Large language models (LLMs) are AI tools that can read, summarize, and translate text. This enables them to predict words and craft sentences that reflect how humans write and speak.

Generative Models

generative-models

Prompt Engineering

prompt-engineering
Prompt engineering is a natural language processing (NLP) concept that involves discovering inputs that yield desirable or useful results. Like most processes, the quality of the inputs determines the quality of the outputs in prompt engineering. Designing effective prompts increases the likelihood that the model will return a response that is both favorable and contextual. Developed by OpenAI, the CLIP (Contrastive Language-Image Pre-training) model is an example of a model that utilizes prompts to classify images and captions from over 400 million image-caption pairs.

OpenAI Business Model

how-does-openai-make-money
OpenAI has built the foundational layer of the AI industry. With large generative models like GPT-3 and DALL-E, OpenAI offers API access to businesses that want to develop applications on top of its foundational models while being able to plug these models into their products and customize these models with proprietary data and additional AI features. On the other hand, OpenAI also released ChatGPT, developing around a freemium model. Microsoft also commercializes opener products through its commercial partnership.

OpenAI/Microsoft

openai-microsoft
OpenAI and Microsoft partnered up from a commercial standpoint. The history of the partnership started in 2016 and consolidated in 2019, with Microsoft investing a billion dollars into the partnership. It’s now taking a leap forward, with Microsoft in talks to put $10 billion into this partnership. Microsoft, through OpenAI, is developing its Azure AI Supercomputer while enhancing its Azure Enterprise Platform and integrating OpenAI’s models into its business and consumer products (GitHub, Office, Bing).

Stability AI Business Model

how-does-stability-ai-make-money
Stability AI is the entity behind Stable Diffusion. Stability makes money from our AI products and from providing AI consulting services to businesses. Stability AI monetizes Stable Diffusion via DreamStudio’s APIs. While it also releases it open-source for anyone to download and use. Stability AI also makes money via enterprise services, where its core development team offers the chance to enterprise customers to service, scale, and customize Stable Diffusion or other large generative models to their needs.

Stability AI Ecosystem

stability-ai-ecosystem
Scroll to Top

Discover more from FourWeekMBA

Subscribe now to keep reading and get access to the full archive.

Continue reading

FourWeekMBA