Reverse Information Paradox by Satya Nadella: … In the AI age, the buyer risks giving away knowledge, just in order to use what they bought.
You essentially pay for intelligence twice, once with money, and again with something even more valuable: the proprietary knowledge you must reveal to make that intelligence useful. The better you want the model to perform, the more of that knowledge you have to feed it!
Over time, the information asymmetry becomes increasingly skewed. The seller learns more and more about you as you use what you purchased, while you learn very little about what the seller is learning in return.
The old software transaction was one-way. You paid for a copy of Word or SQL Server, and the vendor learned nothing about the contract you wrote or the query you ran. Each subsequent shift, from on-premises to cloud, raised its own sovereignty question, but the buyer could still keep critical knowledge close to the chest. AI reverses the arc. Every prompt shows another card, and the better the answer you want, the more of your hand you reveal.
The interesting question is no longer whether to use AI. It is who protects you when the model provider will not. On-device inference, model-side privacy guarantees, tenanted training boundaries. None of these guardrails are protecting you today, which means anyone will be outmaneuvered tomorrow.
Disclosure: Satya Nadella is the CEO of Microsoft, my employer. These are my personal views, not Microsoft's.