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How Big Tech is courting Big Oil
Oct 21, 2024

How Big Tech is courting Big Oil

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Journalist Karen Hao explains how Microsoft is selling AI tools to fossil fuel companies while promising to be carbon negative by 2030.

Artificial intelligence, according to its boosters, could help us unlock solutions to some of the world’s toughest problems, like climate change.

But in the meantime, it’s become a key tool for fossil fuel companies like Exxon Mobil and Chevron to maximize the extraction of emissions-producing oil and gas.

Marketplace’s Meghan McCarty Carino spoke to freelance reporter Karen Hao, who recently wrote in The Atlantic about how Microsoft has courted the fossil fuel industry.

The following is an edited transcript of their conversation.

Karen Hao: One of the most common promises that the industry at large, but Microsoft in particular, makes is that these advancements are going to somehow solve climate change. It’s going to be really great for the environment. It’s going to help us confront this global crisis that we’ve been in and have really struggled to confront. And what I found was even as Microsoft says this and bolsters its reputation as an AI leader, as a sustainability leader, and also uses this as a way to influence policymakers and lobby them to continue allowing Microsoft to do what it’s doing, it is also literally at the same time selling AI to fossil fuel companies for fossil fuel extraction. So, it’s not just giving these companies access to their technologies in a very neutral way, Microsoft is actively marketing to the world’s largest fossil fuel producers, saying that “as an AI leader, believe us that this technology that we’re developing is going to be great for your business, because it is going to help you explore, find and extract more fossil fuels and increase your bottom line.”

Meghan McCarty Carino: Let’s talk about some of the AI tools that Microsoft is providing to the fossil fuel industry. What does their technology actually help the oil and gas industry do?

Hao: Microsoft provides kind of a suite of different types of tools for the oil and gas industry. At a baseline, they provide cloud technologies, which doesn’t have anything to do with AI. But then on top of that, their Azure cloud platform also includes a lot of different types of AI tools. They partnered with Schlumberger, which is an oil and gas technology provider, to build a custom platform that helps these companies explore for more fossil fuel reserves. And then on top of that, they have all of these other AI tools that are meant to increase the efficiency of the extraction process. Things like optimizing the drill bits so that they navigate and move through shale, for example, in a better way. And then the last kind of layer is that Microsoft is also an exclusive provider of OpenAI technologies when it comes to other cloud companies, and so they also provide a lot of productivity tools that are built with OpenAI’s models to the fossil fuel industry, not for fossil fuel extraction necessarily, but for boosting the productivity of the fossil fuel industry’s workforce. So, it’s like a one-stop shop that Microsoft pitches to these companies.

McCarty Carino: And how beneficial is this partnership to both the fossil fuel industry and Microsoft?

Hao: The way that Microsoft frames it in their marketing materials, this one document or presentation that I saw, where they had prepared an analysis for Exxon Mobil, they said to Exxon Mobil, “If you adopt our tools, we will be able to boost roughly 1% of your annual revenue.” And that is an enormous proposition that they’re providing to these companies. When I asked Microsoft and Exxon Mobil for comment, they declined to comment and didn’t really say whether or not this was something that actually ended up happening. But this is how Microsoft is presenting the partnership. There were also internal strategy docs that I viewed within Microsoft about the specific collaboration that they had with Schlumberger. The reason why they wanted to develop a custom, bespoke platform for the fossil fuel industry was because they saw this huge potential to capture the largest fossil fuel providers onto the Azure platform and increase Azure consumption by the fossil fuel industry. And there were separate documents that placed the market potential for Microsoft in the fossil fuel industry business between $35 billion and $75 billion, so this is a huge chunk of money that Microsoft is trying to go after, and is trying to go after very aggressively.

McCarty Carino: What does Microsoft say about its contracts with fossil fuel companies?

Hao: I sat down with Microsoft’s vice president of energy, Darryl Willis, for half an hour, and in that half hour, he said “it’s complicated” 11 times. And so that’s one answer that Microsoft says, is that it’s just complicated. They obviously are a business that is responding to shareholders. They’ve spent an enormous amount of money on AI, so they need to recuperate the cost somehow. And they’re trying to figure out a way to sell AI to every industry. You know, it’s not just that they’re trying to sell to the fossil fuel industry. They’re knocking on all the doors, but the fossil fuel industry has a lot of money, so they’re knocking on that door pretty hard.

But the other thing that Microsoft says is that ultimately, as a world, as a society, we need to transition away from fossil fuels, obviously, and in order to do that, we have to bring along the fossil fuel producers. And so, they argue that Microsoft, by being in partnership with these companies, has a seat at the table and are kind of helping these companies do that transition. But the challenge is that Microsoft just has not actually demonstrated that it is doing this for the companies. Like it’s really focused on selling these technologies to the industry in a way that will increase or entrench the fossil fuel part of their business, and there’s very little that’s happening to actually try to move them toward more renewable projects or products that can allow them to phase out their reliance on the fossil fuel side of their business.

McCarty Carino: And tell us more about what makes this seem so hypocritical for Microsoft. What kinds of commitments has the company made when it comes to climate?

Hao: Microsoft has been famous in particular for commitments that it made in 2020 to be carbon negative by 2030. And at the time, this was an incredibly ambitious move by any company, and by a tech company in particular. It really stuck out its neck in the industry. And it has really kind of ridden this wave of this reputation that it established at the time, which was that it was willing to go against the grain or ahead of the curve in being a climate leader.

McCarty Carino: All of this is to say nothing of the emissions involved with AI technology itself, which are considerable, right?

Hao: Yeah, there was recently news that Microsoft is literally bringing online Three Mile Island to power its data centers, which is largely being driven by the AI development that Microsoft is doing, and specifically the kind of cutting-edge, general-purpose AI models that it’s supporting OpenAI in developing and supporting other startups in developing. So, it’s like the most colossal AI models that we have ever seen, and that is what’s leading to this insane explosion of energy consumption that’s going into AI development itself. And yeah, I also asked Darryl Willis about this. I was like, “How do you square the sheer amount of energy that’s even going into developing this technology, and then you’re using that kind of AI leadership reputation to then sell more tools that are going to enable emissions?” And he gave me kind of the Microsoft party line, which is like, “Well, we believe that generative AI is going to be net beneficial in the end.” That’s not based on science or in fact. He’s talking about a belief here.

More on this

We reached out to Microsoft for its response to Karen’s reporting. A Microsoft spokesperson sent us this response:

“The energy transition is complex and requires moving forward in a principled manner. We believe that technology has an important role to play in helping the industry decarbonize, and that requires balancing the energy needs and industry practices of today while inventing and deploying those of tomorrow.”      

Earlier this year, Karen also did a deep dive on the environmental impact of data centers, which are going up in massive numbers to power the AI boom, and it’s not just about electricity.

Many data centers are concentrated in the American southwest, but they require quite a lot of water to cool the servers, something you might guess is not in ample supply in that region.

Last month, as Karen noted, Microsoft made a deal to restart the Three Mile Island nuclear plant to help power the tech company’s data centers. And last week brought news that Google and Amazon are also going nuclear.

Both are investing in a new kind of small modular reactor to help fuel the seemingly insatiable energy appetite of AI.

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The team

Daisy Palacios Senior Producer
Daniel Shin Producer
Jesús Alvarado Associate Producer
Rosie Hughes Assistant Producer