Tech News : 36 Cents per Chat Query Prompts $30 Microsoft Fee

26th July 2023

Microsoft’s announcement of pricing for its AI productivity suite 365 Copilot shows its intent to monetise its AI, ending any expectations of free AI provision.

Furthering Its (Monetising) Ambitions – Microsoft 365 Copilot & Bing Chat Enterprise 

Announced under the heading “furthering our ambitions”, Microsoft has released details of both Bing Chat Enterprise and Microsoft 365 Copilot pricing.

Bing Chat Enterprise is an AI-powered chat tool for work with commercial data protection that’s accessible for subscriber via bing.com/chat and the Microsoft Edge sidebar in their work account.

Microsoft 365 Copilot is the company’s AI chatbot, processing, and orchestration engine that’s embedded in the Microsoft 365 apps and works behind the scenes to combine the power of LLMs like GPT-4, with the Microsoft 365 apps and business data in the Microsoft Graph.

Microsoft 365 Copilot Pricing 

Microsoft has announced that 365 pricing for Copilot for commercial customers will be $30 per user, per month for Microsoft 365 E3, E5, Business Standard and Business Premium customers (when broadly available). The pricing follows the expansion of the Microsoft 365 Copilot paid Early Access Program in May to 600 enterprise customers worldwide, including companies like KPMG, Lumen, and Emirates NBD. The company is confident that the value of Copilot expressed during the Early Access Program and the AI tool’s benefits justify the price tag, saying: “The more customers use Copilot, the more their enthusiasm for Copilot grows. Soon, no one will want to work without it.”

Why Microsoft Says It’s Worth The Extra $360 Per Year 

In its pricing announcement, Microsoft reminded users what makes Copilot worth the extra investment, citing:

– Unlike some generative AI apps, Copilot doesn’t focus on a single capability but “puts thousands of skills at your command and can reason over all your content and context to take on any task”.

– Copilot’s good on its own, but also integrated into the popular 365 apps (millions of people use daily).

– It uses the customer’s actual business data in the Microsoft Graph thereby “grounding” it – making it practically useful and customised.

Microsoft’s Investment In AI (And OpenAI)

Microsoft has invested heavily in AI and incorporating it into its products. For example, OpenAI, ChatGPT’s developers, first partnered with Microsoft in July 2019 in a collaboration aimed at bringing OpenAI’s technologies to Microsoft’s cloud services, allowing customers to build and run AI-powered applications and services. ChatGPT is also supported by Microsoft’s Azure services as part of the collaboration.

Fast forward to today and OpenAI’s models and generative capability have been deployed across Microsoft’s consumer and enterprise products as Copilot in (for example) 365 Copilot, Copilot for Viva, Copilot X (for coding), and Security Copilot.

A Lesson From ChatGPT 

It’s clear that Microsoft has learned from ChatGPT’s experience, i.e. having to introduce a $20 version relatively early on to cover its operating costs, estimated in April to have been $700,000 per day / 36 cents per query (ref. SemiAnalysis) and, therefore, has realised the need for and the potential value of monetising Copilot as early as possible.

Also, with many businesses now having fully adopted ChatGPT as an important business tool, realised its benefits (and therefore the benefits of generative AI), and with many having signed up happily to the $20 version, $30 for what Microsoft sees as an added value, wider scope version probably seems to Microsoft like a fair price. To Microsoft at least.

Questions 

Some commentators, however, still have some questions about a possible lack of case studies, figures, and success stories to date about how companies have actually been using Copilot in the real world to demonstrably improve productivity, efficiency, creativity, and profits. No doubt, these will come in time as Copilot is relatively new to most businesses.

Also, since Copilot is grounded in a company’s own data, it’s arguably important to have quality data in the Microsoft Graph to get a quality output. For example, as ChatGPT users will know, the better the prompt and help that the chatbot’s given as an instruction, the better the relevance and quality of its output.

What Does This Mean For Your Business? 

It’s true that the operating costs of AI chatbots are high, as experienced by ChatGPT. Many businesses are already aware of the value of generative AI and as with ChatGPT, have shown that paying for a ‘business’ version is popular. These are two reasons why, along with its considerable investment in AI, Microsoft’s “Ambitions” already include charging $30 per user per month for Copilot which the company sees as more than just a one-trick AI pony. Copilot’s integration into popular apps and its ability to work across the whole 365 suite as an orchestrating engine offers businesses obvious productivity and efficiency benefits, provided users are able to understand and harness its power, and this ability to get much greater value from Microsoft 365 that could translate into profits may be something that businesses feel is worth the extra money.

Just as Microsoft is committed to AI across its services, AI is something that’s spreading across all areas of work and personal life in some form or another and with Microsoft and OpenAI both charging for it, perhaps expect (business) AI services coming from other providers to be chargeable too.