Published - January 10, 2023 @ 11:16 AM (EET)
US technology giant Microsoft Corp. (NASDAQ:MSFT) is reportedly negotiating with the creator of the viral artificial intelligence bot ChatGPT to invest as much as $10 billion in OpenAI.
People familiar with the plans told the news website Semafor that the proposal under consideration calls for Microsoft to invest the capital over several years, though the final terms may change.
The funding, supported by other venture firms like Thrive Capital and Founders Fund, would value OpenAI at $29 billion, the report noted.
Though it still needs to be determined whether the deal has been finalized, documents sent to prospective investors show that it had targeted a close by the end of 2022.
WHAT HAPPENED
On 30 November, the ChatGPT chatbot was made available for free public testing by OpenAI, co-founded by Tesla (NASDAQ:TSLA) Chief Executive Elon Musk and investor Sam Altman.
Coming at the end of a year of head-grabbing advances in AI, the technology is built on OpenAI's GPT-3 language model. Giving rise to a broad debate about the effect of AI on creative industries, the company's Dall-E image-generating model recognizes prompts to synthesize art and other images.
Currently, the organization generates money by charging developers to license its technology, and although OpenAI has achieved such a high valuation, it is still incurring losses.
Each time its chatbox gives answers, it costs the company a minimum of 1 cent per answer.
NOW WHAT
The funding terms are part of a complicated deal in which Microsoft would get 75% of OpenAI's profit until the tech giant can recover its investment.
Once hitting the threshold, Microsoft will have a 49% stake in OpenAI, while other investors will receive another 49%. According to the report, OpenAI's non-profit parent will obtain 2%.
Previously, the Satya Nadella-led company invested about $1 billion in OpenAI and is also working on adding ChatGPT to its Bing search engine to compete with Google-parent Alphabet Inc.'s search offering.
Unlike the basic set of links that a Google search provides, the bot can respond to queries in a natural and human-like form by carrying on a conversation and answering follow-up questions.
Microsoft declined to comment, while OpenAI did not immediately respond to requests for comment.
