Microsoft CEO Satya Nadella posted criticism of AI labs like OpenAI and Anthropic, calling their ban
on knowledge distillation ironic. Knowledge distillation is the process by which small models learn from large model outputs; these labs prohibit this behavior in their terms of service, mainly targeting Chinese AI companies. Nadella pointed out that these labs train on public data on the grounds of fair use, while prohibiting distillation and learning from user interactions. He believes this leads to economic value concentrated in the hands of infrastructure operators rather than companies that actually generate knowledge. Nadella calls this the "reverse information paradox": companies pay AI twice, first pay, then "exhaust"—that is, corrections, scoring, and usage data generated from interactions with AI systems, which AI providers may use to build competing products.
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Nadella calls this the "reverse information paradox."：https://snscratchpad.com/posts/reverse-information-paradox/ Companies pay for AI twice. First with money, then with what he calls the "exhaust," meaning the corrections, ratings, and usage data from interactions with AI systems that reveal internal company knowledge. AI providers can learn from all of this and potentially build competing products：https://the-decoder.com/sam-altman-explains-why-openai-might-steamroll-your-ai-startup/. Nadella, of course, happens to have just the infrastructure to offer companies that want to control their own learning loop. Ad DEC_D_Incontent-1 Ad
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