Microsoft CEO Satya Nadella says datacenter location is “the least important thing” for AI sovereignty.
In a chat with BlackRock CEO Larry Fink at the Davos World Economic Forum, SatNad argued that corporate AI sovereignty hinges on control over models trained on proprietary knowledge, not the physcial infrastructure location.
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“If you’re not able to embed the tacit knowledge of the firm in a set of weights in a model that you control, by definition you have no sovereignty. That means you’re leaking enterprise value to some model somewhere.”
He added: “In fact, the datacenter, where it runs, is the least important thing.”
“In the AI era, the topic that’s least talked about, but I feel will be most talked about in this calendar year, will be the sovereignty of a firm,” Nadella continued.
The reframing follows Microsoft’s struggles with traditional data sovereignty. The software and cloud biz’s EU data boundary – intended to assuage European customers’ concerns over dependency on a US-owned entity – cannot guarantee protection against US government access demands.
So it is better to advance the conversation to sovereignty in the AI era, where – according to Nadella – datacenter location is the least of an enterprise’s worries. He said encryption would address sovereignty concerns with only the speed of light constraining datacenters placements.
That assumes sovereignty in the AI era is somehow different from digital sovereignty. A paper published yesterday by the World Economic Forum described AI sovereignty as “the ability of economies to shape, deploy, and govern AI ecosystems in accordance with their own values, whilst ensuring strategic and operational control, flexibility, and, ultimately, resilience through a combination of localized investment and trusted international collaboration.”
Nadella, however, moved beyond national needs and onto the sovereignty of a corporation, regardless of where it is sited. “There is comparative advantage in countries. There is comparative advantage in firms,” he said.
“That needs to be preserved, even in the AI era. That’s what’ll give you real sovereignty.”
Elsewhere in his discussion with Fink, Nadella delved into AI market dynamics and tackled the B word. He said a bubble would exist “if all we are talking about are the tech firms,” noting the technology “depends on demand all over the world.”
Weeks ago, the exec claimed it was time for the next stage of AI acceptance following the “initial phase of discovery.” Microsoft has bet big on AI, via multibillion-dollar investments in OpenAI, squeezing generative AI into every part of its portfolio, and spending hundreds of billions on heavy-duty datacenter infrastructure. It has skin in this game. ®