Microsoft is reportedly making a big move to gain an edge over its competitors by investing $10 billion in OpenAI, the creators of ChatGPT.
OpenAI specializes in creating software that can learn and adapt to different tasks.
The company is catching the attention of casual users and industry professionals with its popular app ChatGPT, which has garnered critical acclaim since it was last released last month.
Sources familiar with the matter tell Semafor that Microsoft and other venture firms are in talks to invest an amount that would value OpenAI at $29 billion.
An investment of this magnitude would be a significant step toward the growth of OpenAI, which can fuel the development of ChatGPT and other AI-related projects.
It also shows the increasing interest in AI among investors and large corporations.
Microsoft’s investment is said to be part of an agreement in which the company will receive 75% of OpenAI’s profits until it recoups its investment.
It’s unknown if the money OpenAI spends on Microsoft’s cloud computing arm is factored into the calculation of the return on investment.
If Microsoft gets its money back, the deal will shift to an ownership structure, according to Semafor’s sources. Under this structure, Microsoft will own a 49% stake, other investors a 49% stake, and OpenAI’s nonprofit parent company the remaining 2%.
The main benefit for Microsoft in this deal is the ability to work directly with OpenAI and influence the direction of its tools. This will help Microsoft stay at the forefront of a significant shift in consumer technology.
It was reported this week that Microsoft is considering integrating OpenAI’s chatbot technology into other products such as Word and Outlook.
We may see ChatGPT integrated into the Microsoft Bing search engine as early as March.
While that sounds like a win for Microsoft, it’s more of a gamble at this stage.
Microsoft is banking on OpenAI’s ability to continue to be a pioneer and leader in AI. However, OpenAI will inevitably face competition from other companies as the field of AI develops rapidly.
A $10 billion investment from Microsoft doesn’t guarantee that OpenAI will continue to thrive. Both companies will face many challenges as they navigate the AI industry, which is constantly evolving and highly competitive.
Both companies have work ahead of them to stay ahead of the curve and relevant in the market.
Featured image: rarrarorro/Shutterstock
