Microsoft is reportedly in discussions to invest $10 billion in OpenAI, the owner of ChatGPT, in a deal that would value the company at $29 billion. This latest move highlights the growing interest in OpenAI, whose chatbot has impressed both beginners and experts with its ability to write poetry, debug code, and answer questions using human-like speech. The funding round could also involve other venture firms, with a target closing date of the end of 2022.
Microsoft’s interest in OpenAI is not new. In 2019, the tech giant invested $1 billion in the company, which was founded by Elon Musk and Sam Altman. Additionally, Microsoft’s cloud services arm provides the necessary computing power for OpenAI’s operations. Last year, Microsoft announced its plans to integrate OpenAI’s image-generation software into its Bing search engine. According to reports, Microsoft is also considering incorporating ChatGPT into its search capabilities as it aims to compete with Google Search.
As part of the new investment, Microsoft will reportedly receive 75% of OpenAI’s profits until it recovers its initial investment. Afterward, Microsoft’s stake in the company would be 49%, while other investors would hold another 49%, and OpenAI’s nonprofit parent would retain 2%.
OpenAI has been pitching to investors and projecting significant revenue growth. It expects to generate $200 million in revenue next year and $1 billion by 2024. The company currently charges developers a small fee to license its technology for generating text and images. However, concerns have been raised about OpenAI’s cash burn, as it reportedly spends a few cents in computing power every time someone uses its chatbot.
Last week, it was reported that OpenAI was in talks to sell existing shares at a valuation of around $29 billion, attracting at least $300 million in investment. The company continues to draw attention and financial support as it focuses on advancing artificial intelligence capabilities.
Neither Microsoft nor OpenAI has commented on the reports of the potential investment deal. However, their previous partnership and Microsoft’s ongoing interest in artificial intelligence suggest that this collaboration could be a significant step forward for both companies in the AI space.
