Microsoft Invests in GenAI Startup Touchcast to Drive Energy Efficiency, Sustainable IT Services

Microsoft has invested in Touchcast, a generative AI and cloud caching startup that improves AI's energy efficiency, Bloomberg reported. Early Touchcast partners include global IT consulting firm Accenture.

The Microsoft investment comes at a key time for Touchcast and generative AI customers. Amid booming demand for AI infrastructure, some critics worry AI chip deployments will trigger exponential energy consumption from cloud service providers (CSPs) and data centers. Among the market forecasts and research findings to note:

• Electricity consumption from data centers, artificial intelligence (AI) and the cryptocurrency sector could double by 2026, according to an International Energy Agency report.
• For 88% of those who have adopted AI, the need for computing power is up dramatically. Nearly half (47%) have had to double their computing power or more since adopting AI, a survey from  Pure Storage and Wakefield Research found.
•  AI could consume up to 3.5% of the world’s electricity by 2030, Gartner predicts

The Microsoft investment in Touchcast surfaces the same week that Microsoft promoted a Datacenter Community Pledge -- which calls for the company to "design and operate our datacenters to support society’s climate goals and become carbon negative, water positive and zero waste before 2030," Corporate VP Noelle Walsh wrote in a blog.

Microsoft Invests in Touchcast: From Metaverse to Gen AI

Touchcast, founded around 2012, is based in New York. Amid the COVID-19 pandemic in 2021, he company focused on Virtual Experience, Mixed Reality and AI opportunities. Some of the work involved heavy bets on a Metaverse-as-a-Service platform that offers communication, collaboration, commerce and learning experiences without requiring avatars, VR headsets or specialized software.

Global IT consulting firm Accenture invested in Touchcast in February 2021 -- more than a year before OpenAI unveiled ChatGPT in November 2022 to spark the generative AI boom.

Betting on Gen AI: Fast forward to May 2024, and Touchcast launched a Cognitive Content Delivery Network (cCDN) for large language models (LLMs) on Microsoft Azure. The cCDN, deployed across all Azure data centers, leverages Touchcast's proprietary technology to deliver "unparalleled cost-efficiency, performance and alignment for generative AI (GenAI) workloads," the companies said.

Touchcast's CogCache software "enables billions of users to access generative AI-powered experiences while minimizing energy consumption and operational costs," Touchcast added.

Microsoft Invests in Touchcast: Executive Perspectives

In a prepared statement about the Microsoft-Touchcast relationship, Touchcast Founder and CEO Edo Segal said in May 2024: "Billions of dollars are already being wasted every year by applications asking LLM’s to repeat prior operations. With Cognitive Caching that waste becomes a savings. As we enter the next era of the AI-powered web, a new class of infrastructure is critical to deliver these magical experiences at internet scale sustainably,. CogCache is the missing link to unlock this unprecedented explosion of use cases and productivity. Avoiding the waste of repeat operations and accelerating them a hundred-fold. We are thrilled to have the support of Microsoft and its senior leadership in making this global vision a reality, prioritizing economic, environmental, and ethical considerations.”

Added Darren Hardman, corporate VP, EMEA at Microsoft. “The cCDN is poised to become a catalyst for the GenAI era, much like CDNs were for the internet in the early 2000s. Microsoft's  collaboration underscores its commitment to driving GenAI adoption while simplifying access, accelerating performance, and reducing costs of LLM usage. Together, we are paving the way for the widespread adoption of generative AI, making it more accessible, efficient, and sustainable.”  

Microsoft did not disclose how much it invested in Touchcast. The startup's overall funding round apparently was $100 million at a $350 million business valuation, Bloomberg reported.