Microsoft’s AI Diffusion Report reveals how generative AI is spreading globally and what that means for countries embracing it. Brad Smith and Juan Lavista Ferres unpack the report’s most striking insights.
Generative AI is spreading fast, but not evenly. In this special edition of Tools and Weapons, I sit down with Juan Lavista Ferres, Director of Microsoft’s AI for Good Lab, to unpack the latest AI Diffusion Report and what it reveals about who benefits most from this new technology.
We explore why diffusion, not just invention, determines long-term impact, examine the widening gap between the Global North and Global South, and spotlight the countries setting the pace, including the United Arab Emirates, Singapore, and South Korea. We also discuss the rise of models like China’s DeepSeek and what shifting adoption patterns mean for the future of AI worldwide.
JUAN LAVISTA FERRES: There are problems that you cannot solve without using AI. And that's the part that we see so much opportunity for the world.
BRAD SMITH: And it goes back to the history of every general-purpose technology. The countries that grow the most over the course of years and decades are not necessarily the ones that produce it. It's the ones that figure out how to use it across the economy. That's what this report is about.
JUAN LAVISTA FERRES: What these datasets provide is a broad view of what is happening across platforms. We have a full view of what happens in AI today.
BRAD SMITH: That’s Juan Lavista Ferres; Chief Data Scientist and Director at Microsoft’s AI for Good Lab. Welcome to a special edition of Tools and Weapons, as Juan and I review the results from Microsoft’s newest AI Diffusion Report. These show the state of global AI usage as we look ahead in 2026, and there’s a lot that stands out. First, while AI adoption continues to grow, there’s a widening gap between the Global North and Global South. Second, some countries are sprinting ahead, like the UAE, Singapore, and the biggest mover; South Korea. And China’s DeepSeek is gaining ground, with implications for geopolitical AI competition. Our discussion about the new AI Diffusion Report, coming up next on Tools and Weapons.
BRAD SMITH: Juan, Happy New Year.
JUAN LAVISTA FERRES: Happy New Year, Brad.
BRAD SMITH: It’s great to be with you. This is our eighth year working together. And the reason we’re getting together today is the new AI Diffusion Report.
JUAN LAVISTA FERRES: Yeah, we just published the report. This is the H2 Report. We compare it to what happened in AI globally versus what happened in the first half of 2025. What this dataset provides is a broad view of what is happening across platforms. Microsoft has billions of devices out there, and we have an understanding of what is happening in these devices. And we have a full view of what happens in AI today.
BRAD SMITH: So everybody talks about AI diffusion, but I’m sure there’s people who go, “What are you guys talking about?”
JUAN LAVISTA FERRES: People, when they think about general-purpose technology, they think about the diffusion of technology. In this particular way, it’s “how many people do we have out there using AI?” Like, it’s about the use—and adoption.
BRAD SMITH: And because AI is a general-purpose technology like electricity, meaning, ultimately, it will touch over time and will improve, every part of the economy. We live in a country where almost 100 percent of the people, both at work and home, have electricity.
JUAN LAVISTA FERRES: Yes.
BRAD SMITH: We wouldn't be comfortable looking around and saying, “Oh my gosh, 80% do, and 20% don't.” We're far away from that when it comes to AI.
JUAN LAVISTA FERRES: There are problems that you cannot solve without using AI. And that's the part that we see so much opportunity for the world.
BRAD SMITH: One of my favorite stories was the one you told, literally, having AI in the rainforest constantly fueling devices to be able to measure biodiversity, not just with cameras that can see, but with Microsoft phones that can hear and AI that can process.
JUAN LAVISTA FERRES:There's 200,000 conservationists out there, and what we saw was a huge effort for them to collect data. And without data, they cannot do their job. They don't understand the species.For them, it's a gamechanger.
One of my favorite projects is about, one of the leading causes of blindness. The world does not have enough ophthalmologists, and in order for them to do screening, we need to have technology to help them. AI is there, not just a solution, but unfortunately, the only solution we have.
BRAD SMITH: History tells us that the countries that grow the most over the course of years and decades are not necessarily the ones that produce it. It's the ones that figure out how to use it across the economy. That's what this report is about.
Let’s dive in. Let's talk about some of the stories that the numbers are showing us.
JUAN LAVISTA FERRES:AI in general, we are seeing—it has been the fastest technology adoption in the world, even to social – even to social networks. We now have over 1.2 billion people around the world using this technology.
And the Global North grew 1.8%. The Global South grew only 1%, which means that there was already a big gap between the two. Now, that gap is widening.
BRAD SMITH: The Global North is almost at 25%. It's at 24.7%. Almost a quarter of the population in the Global North is now using generative AI. In the Global South, it's under 15%. It’s 14.1%. You look at those numbers, and you say, “Wow, at this rate, another year or so, we may see the Global North at twice what it is in the Global South.”
JUAN LAVISTA FERRES: Yes, that's something that will likely happen.
BRAD SMITH: And that's sobering, because, in a sense, the economic divide between North and South, on a planetary basis, I think, was, in some ways, created because of the divide in electricity use.
And then the question is, well, will AI be something that can help people close this gap, or will it widen that gap? The future is yet to be written. But right now, we're going in the wrong direction.
JUAN LAVISTA FERRES: Yeah, and what is interesting to me is that, if you look at the Global North, majority of the country has electricity, has- access to internet. We don't see that in a lot of countries in the Global South, which means that a lot of these countries will even get to a point where there's no more growth for them.
BRAD SMITH: We've created a leader board, looked at where countries ranked. First half of 2025, the global leader was the UAE, the United Arab Emirates. It was number one. Singapore was number two. They were the two countries above 50% usage. Now, the UAE has widened its lead over the course of the year.
JUAN LAVISTA FERRES: Yes.
BRAD SMITH: Globally, use went up 1.2%. UAE, it went up by what, 4.6%.
JUAN LAVISTA FERRES: And this is something that is also kind of not expected. Those countries that are- the ones that have more share, it’s more difficult for them, because majority of the share, usually these follows occur. We're not seeing that in UAE. Other than South Korea, UAE is the country in the world that has grown more share.
BRAD SMITH:You were in the UAE in November. I was there in November. Why is the UAE doing so well?
JUAN LAVISTA FERRES: What I saw there was, kind of everybody was talking about AI. And everybody was talking about AI in a very positive way, in many ways. That's something that I haven't seen in other countries. You have the government behind the fact that they need – people need to see AI as a very – as an excellent tool to improve productivity, for example.
BRAD SMITH: When we went to the Department of Health at Abu Dhabi and then their command center. You could just see how AI was being used to make sure that ambulances got to a patient faster, could be redirected through traffic faster, to take a patient to the right hospital, and if a patient was likely to need to be hospitalized, to a hospital where there was going to be a bed available.
JUAN LAVISTA FERRES: Yes.
BRAD SMITH: That's called saving lives. But I also saw the trust. And I think you did too.
JUAN LAVISTA FERRES: Yeah, that's the part that I saw, is people would trust, “Hey, this is something that, it makes sense. It will help me do my job. It will help increase the productivity.” It was a very positive conversation.
BRAD SMITH:There was also one big mover. If you look at the leaderboard, the big surprise, really was South Korea, wasn't it? It moved from, what, 25th in the world to 18th in the world? That's a big jump. How did it do that?
JUAN LAVISTA FERRES: Yeah, that's the biggest jump that we saw. There are three things that I think are different. The first one, is similar to the UAE, you have a government that is investing a lot in AI, is talking a lot about AI, and I think that that plays on the trust side.
The second aspect is that in the early versions of ChatGPT, GPT-3.5, it wasn't great in Korean. When OpenAI released a 4o, two things happened. First one is they bring the capability to share images. That goes viral, and it goes viral across the world, not just in Korea. But in Korea, we see a bigger adoption.
And 4o was also much better in Korean. I think that helps people understand that you could use it to generate Studio Ghibli, but you could also use it to answer questions. And I think that that that virality helped. The difference between South Korea and the rest of the countries is in South Korea, that remains stable. Typically, when something goes viral, it goes up and then goes down. In the case of South Korea, it goes up and the amount of people using it remained-
BRAD SMITH: -It stayed.In some ways it’s the story, again, governments investing. That probably builds trust. Things are going viral, meaning people find it useful. They enjoy using it. But then I think this third dimension, to really be adopted by a broad population, it has to be good in the language that people speak.
JUAN LAVISTA FERRES: Yes.
BRAD SMITH: GPT-3.5, eh, it wasn't great in Korean. By the time you got to 5, it was really quite, quite good.
JUAN LAVISTA FERRES: Yeah, there is product truth, and that's something – definitely, that's something that we see today in South Korea.
BRAD SMITH: I suspect, for Americans who are watching this or listening to us, they're like, “Wait, what's going on? I thought the U.S. was the global leader. That's what we hear all the time. We're number one.” And when it comes to AI infrastructure, when it comes to frontier model innovation, the U.S. is. It is the leader in what you might call leading-edge innovation.
But one of the reasons we're so passionate about diffusion is because, as we study history, what we see is that if it's a general-purpose technology, you don't have to be the leader in producing it to be the leader, as a country, in putting it to use. And if you can be the leader in putting it to use, you'll probably grow faster than other countries.
But I said last month, “Well, but when it comes to AI adoption, AI diffusion, we're number 23 as a nation.” That was from the data based on the first half of the year. The U.S. went down one. Now, we can say we're number 24.
JUAN LAVISTA FERRES: Yeah, so the U.S. grew– grew 2%. We see a lot of use of AI. We see a lot of subscribers, but yeah, on a per-capita basis, it’s not doing as well as many other countries, in Europe and even countries like UAE or Singapore.
BRAD SMITH: When I was in Ottawa last month with Prime Minister Carney, he turned to me and said, “Hey, I've seen the data. Canada is number 14. How does Canada move up the ranks? What should it do?” And I said, “Well, look, the history is a really good guide here. You should do one thing above all else, invest in skilling.”
JUAN LAVISTA FERRES: Yes.
BRAD SMITH: That's another part of the UAE story. The UAE was not only the first country in the world to have an AI minister, but the very first thing the AI minister did in 2017 was say, “I'm going to scale the government employees so that they know how to use the AI. The government starts to use AI.” That builds adoption. It builds trust. It all fits together.
Now, you put that together, and you see is the U.S. hasn't yet reached 30%, when the UAE is over 60. And we're not yet, I don't think, seeing investments at the national level, either collectively, in a company by company, state by state. It's not yet accelerating in the U.S. or Canada or Western Europe the way it is, say, in the UAE or Singapore.
JUAN LAVISTA FERRES: Even in the case of South Korea, they actually have invested a lot in making sure that they – you have curriculum, AI curriculum as part of high school, for example. Also at university, but K12 on making sure that people have the skills.
I think that the investment that you need for society to skill the AI population will be much smaller than doing, for example, for coding. That's how I think there's an opportunity there.
BRAD SMITH: Right now, you see governments willing to invest large amounts of public money, taxpayer money, especially in, say, the European Union, to build out infrastructure. When I was in Portugal in November, they were putting together a bid to get $10 billion of European Union investment in AI infrastructure. And when we were there, we announced a $10 billion Microsoft investment in AI infrastructure.
What people are not figuring out is: what would be a smart way to spend $10 billion to skill people? And you look at, say, a country like France: widened its lead over the U.S.
The private sector is investing in infrastructure. If we want AI to make its way into education in a smart way that really equips people with the skills they need, that's where we're going to need more public sector support.
JUAN LAVISTA FERRES: And when you look at this list, majority of these countries in the top, at least in the top 20, all of them are very similar. So, something is different in these countries. That's something that I would love for us to spend time, is going deep. It's like, what is the difference between countries? And usually, likely skilling will play a role there.
BRAD SMITH: I think it's got to be one of the most important AI topics for 2026.
The big story of 2025, when we look back at the past year, in some parts of the world, it was about DeepSeek.
JUAN LAVISTA FERRES: Yes.
BRAD SMITH: It was about Chinese open-source models. What's the pattern that you see in the data there?
JUAN LAVISTA FERRES: When DeepSeek started in January, first, it was kind of the only new model that was now playing at the frontier, but it was also different in the sense that it was open-source. Anybody could potentially use it, and their service was free, meaning that not only the model was open—open-weights, not necessarily open-source—but the application didn’t require a credit card. The rest of the models, whether it’s Gemini or OpenAI, ChatGPT or Anthropic, they usually have a free version, but this was different because it was- at the same rate, but free.
When we look at the data, you have big disparity between, well, countries like China, Russia, Belarus or Cuba. All of these countries have very high use of DeepSeek. But in the Global South, we see something different. On one side, Latin America has very low usage. But Africa, actually, you have a lot of countries that have higher than 20 points of share, probably didn't exist last year.
Definitely, DeepSeek has been the revelation of this year, for a new model perspective, and it's changing the dynamics in the world, I would say.
BRAD SMITH: From a U.S. perspective, or, say, people who are U.S. policy makers, one of the lessons from this report is: the real competition is also about diffusion. U.S. should feel good about the Global North. But in Africa, that's the place where Chinese AI is accelerating. American AI is not.
If people in the U.S. Congress want to think about the future, it's probably worth spending a little bit of time thinking about the continent that's growing the most–
JUAN LAVISTA FERRES: Yes.
BRAD SMITH: –Where the population is the youngest that is going to have such an impact over the next quarter century.
JUAN LAVISTA FERRES: Yes, certainly. And then again, when you think about the next 50-60, years, we have to remember today that in countries like Nigeria, you have more babies born in a year than you have in Europe. That population dynamic is changing. This country will become even more relevant. And that's where we see again, outside China, Russia, Belarus or Cuba, that's where we see the biggest market share for DeepSeek.
BRAD SMITH: As we look to 2026, the weeks and months ahead, any early predictions of what you think we might see?
JUAN LAVISTA FERRES: We will continue to see growth of AI adoption. I don't think this is going to stop. Unfortunately, I think it’s going to be easy to predict that that gap between the Global North and the Global South, will continue to grow, too.
I think that what we'll see will be better models. Hopefully, the growth in the Global South, people will have adoption, too, but yeah.
BRAD SMITH: I think countries, understandably, naturally, maybe even reasonably, are thinking about AI as a race, as competition. The first question that I hope more people will think about, especially if they're in positions of, say, government leadership and responsibility, is, what the race is all about. It's not just about innovation and infrastructure. Don't think less about those, but think more about diffusion and adoption.
Second, know your numbers. Know where you stand in the world. You may be in a different position than you think, and you'll never know unless you take the time to understand your numbers. Third, I think every government leader should ask the question that Prime Minister Carney asked me, “How can we do better? How can we rise up the ranks?”
And then finally, if there's one thing we've learned in 51 years, almost, at Microsoft, don't just learn from yourself. Learn from your competitors. Always learn from the leaders. If the UAE is leading because the government's adopting AI, the public sector is helping create great uses for AI, people are investing in skilling in AI, and they're doing what it takes to build trust in AI, that seems like a pretty good combination.
Do you think there'll come a point in the future, decades, years ahead, where people are going to say, no, we need to have 100% AI adoption, AI diffusion, in order to feel good about opportunities for everybody?
JUAN LAVISTA FERRES: That's a great question. I think that when we look at the trend, I expect the numbers will continue going up. When we think about how people can leverage this technology, from health care, to industries, to their own productivity, it’s like, for example, when I look at my team, I want everybody to be using this technology. I think it's great for me. I would love for people to understand that this is something that gets people more productive.
BRAD SMITH: We'll have more to talk about. I know you're going to be measuring even more. And for those of you who joined today, thank you.