Microsoft In Talks To Invest An Additional $10 Billion Into OpenAI
OpenAI
Microsoft In Talks To Invest An Additional $10 Billion Into OpenAI
How Microsoft’s $10 Billion Investment in OpenAI Could Shape the Future
Introduction
Microsoft has reportedly entered into talks to invest another $10 billion into OpenAI, the San Francisco-based firm that owns ChatGPT. This potential investment would bring Microsoft’s total investment in OpenAI to $11 billion, and value the firm at a whopping $29 billion. According to Semafor, this information is correct as told by people with knowledge of the matter. This is certainly a major development for both Microsoft and OpenAI, and one worth exploring further.
How much is Microsoft considering investing?
According to Semafor, Microsoft is in talks to invest $10 billion into OpenAI, a San Francisco-based AI firm. The investment would value the firm at roughly $29 billion and is part of a round of funding that includes other venture firms. Until Microsoft recoups the money it invested in the project, it will receive 75% of the project’s profits. Once OpenAI figures out how to make money on ChatGPT and other products like the image creation tool Dall-E, Microsoft will then have a 49% stake in OpenAI with other investors taking another 49%, and OpenAI’s nonprofit parent getting 2%.
Microsoft has already invested $1 billion in OpenAI in 2019 and was recently reported to be working on launching a version of its search engine Bing using the AI behind ChatGPT. According to the report, prospective investors have received deal documents in recent weeks in order to close the round by the end of 2022. Microsoft refused to comment while OpenAI has yet to reply to Reuters’ request for comment.
What would this mean for OpenAI?
If Microsoft’s proposed investment goes through, OpenAI stands to gain an additional $10 billion, according to the Semafor report. According to a report in the Wall Street Journal, OpenAI is in talks to sell existing shares to venture capital firms like Thrive Capital and Founders Fund for roughly $29 billion. Among others, the funding is coming from other venture firms, and the deal was set to close by the end of 2022.The Semafor report said the funding terms included Microsoft getting 75 percent of OpenAI’s profits until it recoups its initial investment once OpenAI figures out how to make money on ChatGPT and other products like image creation tool Dall-E. On hitting that threshold Microsoft would have a 49pc stake in OpenAI with other investors taking another 49pc and OpenAI’s nonprofit parent getting 2pc the report said without clarifying what the stakes would be until Microsoft got its money back.
OpenAI’s new cash infusion could help it develop further applications of its AI technology, such as its chatbot ChatGPT, which was made available for free public testing in November 2020.
What are the benefits for Microsoft?
The potential investment by Microsoft could bring significant benefits to the company, including the ability to use the AI behind ChatGPT, the chatbot available for free public testing, in its own search engine Bing. In addition, the funding includes other venture firms and deal documents have been sent to prospective investors in recent weeks with the aim to close the round by the end of 2022 according to Semafor.
The terms of the funding reportedly include Microsoft getting 75 percent of OpenAI’s profits until it recoups its initial investment once OpenAI figures out how to make money on ChatGPT and other products like image creation tool Dall-E. On hitting that threshold Microsoft would have a 49pc stake in OpenAI with other investors taking another 49pc and OpenAI’s nonprofit parent getting 2pc the report said without clarifying what the stakes would be until Microsoft got its money back.
However, if this investment goes through, it could open up many opportunities for both Microsoft and OpenAI in terms of innovation, development, and growth.
