GPT

Microsoft's reportedly in talks to invest $10B in OpenAI (it's all about the ChatGPT edge)

Wednesday, January 11, 2023 by Snacks
Microsoft has entered the chat (Jakub Porzycki/Getty Images)

Microsoft has entered the chat (Jakub Porzycki/Getty Images)

Microsoft Word meets artificial intelligence… We’ve come a long way since Clippy. Microsoft’s Office Assistant used to be a cartoon paperclip — now it could be a sophisticated AI brain. Microsoft has been in talks to invest $10B in OpenAI, Semafor reported. OpenAI is the company behind genAI tools like ChatGPT and DALL-E, which generate articles and images from text prompts.

  • Excelling: ChatGPT went viral upon its release in November. OpenAI said 1M+ people signed up to test the chatbot in the first five days.

  • Power points: Microsoft would reportedly get to keep 75% of OpenAI’s profits until it recoups its investment. After that it would own a 49% stake in the company.

  • Outlook: The funding would value OpenAI at $29B, up from $20B in October. The deal could fall apart, but it’s apparently targeted to close by year’s end.

Microsoft’s edge… Microsoft invested $1B in OpenAI in 2019 — and also sells the cloud infrastructure that the tech runs on. According to founder Sam Altman, OpenAI spends a few cents in computing power each time someone uses ChatGPT. That goes straight into Microsoft’s pockets. By deepening its involvement with OpenAI’s tech, Microsoft would gain an edge over cloud titans like Amazon and Google. Also:

  • Search: Microsoft could incorporate ChatGPT’s chatbot or DALL-E’s image generator into its search engine, Bing, to better compete with Google.

  • Office: Microsoft could also include OpenAI’s tech in programs like Word and Outlook (think: using ChatGPT to help you write emails).

THE TAKEAWAY

Acquire (relationships) early… Right now OpenAI is still free to the public (though it charges developers for licenses). But one day it could disrupt Google’s search dominance and rake in billions. Microsoft got in early to build a dependent relationship, and it could reap the benefits. Still, OpenAI has fierce competition — and its commercial success is far from guaranteed.

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