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Popular Microsoft Chatbot XiaoIce Gains Independence as a New Company Led by Di Li and Harry Shum

Microsoft announced it would spin off its chatbot business XiaoIce, with all associated technologies licensed to a newly formed independent company.

This week, Microsoft announced it would spin off its chatbot business XiaoIce, with all associated technologies licensed to a newly formed independent company. Microsoft says it will maintain an investment interest in the company.

Microsoft launched XiaoIce in 2014. The AI-powered system was developed by Microsoft Software Technology Center Asia (STCA) based on its Empathic computing framework. Microsoft has described the personable XiaoIce chatbot as part of “a massive and multi-dimensional artificial intelligence (AI) framework, which continuously uses deep learning techniques to soak up the types of data that build up her emotional intelligence (EQ)… she is learning to be more like ‘us’ every day.”

The XiaoIce brand is widely popular in China. Based on the same framework, Microsoft has rolled out similar chatbots in other countries — Ruuh in India, Rinna (りんな) in Japan, another Rinna in Indonesia, and Zo in the United States.

Serving hundreds of millions of users across a booming field, why did Microsoft choose a partial exit at this time? Some US analysts have suggested the move reflects the company’s continuing pivot from consumer to commercial products.

In the official statement announcing the spin-off, the tech giant said the move is designed to “enable the XiaoIce team to accelerate the pace of local innovation and commercialization of XiaoIce technologies, accelerate the growth of the XiaoIce ecosystem, and provide much-requested customize services for XiaoIce customers and partners.

Unlike Microsoft’s productivity assistant Cortana, XiaoIce is “uniquely designed as an AI companion with an emotional connection to satisfy the human need for communication, affection, and social belonging,” explains the Microsoft research paper The Design and Implementation of XiaoIce, an Empathetic Social Chatbot. Two of the authors on the 2018 research paper will be part of the new company’s leadership. Di Li will act as CEO while former Microsoft Executive Vice President and head of Microsoft AI and Research Heung-Yeung (Harry) Shum, who left Microsoft this February, will be Chairman of the Board.

Shum joined Microsoft Research in 1996. When Microsoft established its AI and Research Group in 2016, Shum was appointed to lead the unit. The initial 5,000 person group comprised Cortana, Bing, and Ambient Computing and Robotics engineering team. As Microsoft’s Executive VP, Shum oversaw the company’s overall strategy and R&D in AI.

Shum has been a big fan of XiaoIce, whose name in Mandarin (小冰) means “Little Bing” – a nod to the Bing search engine. In his speech Explaining AI at this year’s a16z Summit just a month prior to his departure from Microsoft, Shum boasted, “XiaoIce is really popular with 120 million monthly active users… A typical digital assistant on the market will have roughly a few turns of conversation with you, but XiaoIce’s CPS (or conversation turns per session) on average actually achieves 23 times. That is a stunning number. Incredibly, the longest conversation any human user has had with XiaoIce is over 29 hours of 7,000 turns.”

Harry Shum’s slides for his talk at a16z Summit

XiaoIce has evolved to its 7th generation, communicated with over 660 million active users, and is on 450 million third-party smart devices. According to Microsoft, its market applications consist of AI chatbot, intelligent voice assistant, AI creation content provider, and a series of vertical domain solutions such as generating financial reports. “We actually now power 90 percent of the quarterly earnings report summaries for 90 percent of Chinese companies, also powered by XiaoIce,” said Shum. “All of these things are possible because of the huge amount of data that we use to train the AI.”

Harry Shum’s slides for his talk at a16z Summit

The announcement raises a number of questions. How much further can XiaoIce evolve, and with what focus and in what direction? Now that the chatbot has virtually moved out of her parent’s home, can this newfound independence be leveraged to more effectively engage and assist Asian and global businesses? And just how will XiaoIce be positioned in today’s ever-changing marketplace? The AI community will be watching the new company’s leadership for the answers.

Journalist: Fangyu Cai | Editor: Michael Sarazen

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