Microsoft sets its sights on ChatGPT, Semafor reports

Microsoft is in negotiations to invest US$10 billion into OpenAI, the force behind ChatGPT, news site Semafor reported Monday.

It was only a matter of time before Big Tech started sniffing around the buzzy artificial intelligence, ChatGPT, which has amazed amateurs and AI experts alike with its ability to spew out essays and poetry, debug code, and negotiate contracts.

Following this funding, which would also include participation from other venture firms, OpenAI would be valued at US$29 billion, people familiar with the matter reported to Semafor.

Reportedly, Microsoft would get a 75 per cent share of OpenAI’s profits until it makes back the money on its investment. Then, Microsoft would revert to a structure that reflects ownership of OpenAI, with Microsoft having a 49 per cent stake, other investors taking another 49 per cent and OpenAI’s nonprofit parent getting 2 per cent.

It is not known yet whether the deal has been finalized, but documents sent to prospective investors in recent weeks, detailing its terms, had suggested a targeted close by the end of 2022.

This move comes after Microsoft injected US$1 billion in cash and cloud credits (for Microsoft Azure) into the AI firm in 2019 and later indicated that it is looking to increase its investment, The Information reported in October last year.

According to the Wall Street Journal, ChatGPT is already allowing allowing employees and early investors to sell their existing shares in a tender offer that would value the company at $29 billion.

Relative to the beefy investments Microsoft’s been responsible for in the past, US$10 billion is not a massive bet, and ChatGPT is wildly lucrative at the moment, Semafor argued. According to Sam Altman, chief executive officer of OpenAI, it only costs the company a few cents in computing power whenever someone engages with its chatbot.

The principal aim of Microsoft, regardless, would be to leverage OpenAI’s technology to advance its cloud business and better compete against rival Amazon Web Services (AWS), Semafor explained.

The investment in OpenAI can also help Microsoft boost its search engine platform, Bing, which only shares a tiny fraction of the Google-dominated web search market.

Microsoft was also in talks to incorporate some of those features into its other programs, such as Word, PowerPoint and Outlook, The Information reported. (subscription required)

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Jim Love, Chief Content Officer, IT World Canada

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Ashee Pamma
Ashee Pamma
Ashee is a writer for ITWC. She completed her degree in Communication and Media Studies at Carleton University in Ottawa. She hopes to become a columnist after further studies in Journalism. You can email her at [email protected]

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