Why Should a Company Own Its Own Intelligence?
Satya Nadella says a company should own its own intelligence so the knowledge it builds with AI stays at the firm instead of leaking to the model company.
Hayek described an economy as local intelligence, with tacit knowledge distributed throughout the economy. Nadella says there cannot be only one firm and one intelligence. Capitalism works because of local intelligence, and price discovery works because of it. Every firm has to accumulate knowledge at increasing scales using AI versus leak. He calls the leak the reverse information paradox. Kenneth Arrow described a paradox of information in which a seller who discloses a secret without a patent, trade secret protection, or copyright protection leaks the value. Nadella says the buyer now needs the protection, because the exhaust of use leaks value: a thumbs up or a thumbs down creates value for the model company instead of letting the firm capture it.
For the arrangement to stay stable, Nadella says more of the surplus created by the use of intelligence has to remain at the firm. The knowledge does not have to sit only in the weights. It can live in context or in evals. Every firm will have a private eval benchmark as core IP, and every model comes in and tries to hill climb on that eval. To Nadella, that is how a firm works.
