Will Microsoft eat Hugging Face?

Last week, Hugging Face announced a new product in collaboration with Microsoft called Hugging Face Endpoints on Azure, which allows users to set up and run thousands of machine learning models on Microsoft’s cloud platform.

Having started as a chatbot application, Hugging Face made its fame as a hub for transformer models, a type of deep learning architecture that has been behind many recent advances in artificial intelligence, including large language models like OpenAI GPT-3 and DeepMind’s protein-folding model AlphaFold.

Large tech companies like Google, Facebook, and Microsoft have been using transformer models for several years. But the past couple of years has seen a growing interest in transformers among smaller companies, including many that don’t have in-house machine learning talent.

This is a great opportunity for companies like Hugging Face, whose vision is to become the GitHub for machine learning. The company recently secured $100 million in Series C at a $2 billion valuation. The company wants to provide a broad range of machine learning services, including off-the-shelf transformer models.

However, creating a business around transformers presents challenges that favor large tech companies and put companies like Hugging Face at a disadvantage. Hugging Face’s collaboration with Microsoft can be the beginning of a market consolidation and a possible acquisition in the future.

Read the full analysis on TechTalks.

For more on AI business:

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• AI’s J-curve and upcoming productivity boom

• Industrial computer vision is getting ready for growth

• DeepMind becomes profitable—and more enmeshed in Google’s business