Microsoft Prepares Massive $10 Billion Bet on ChatGPT Creator OpenAI
Microsoft plans to invest up to $10 billion into OpenAI, aiming to integrate the startup's groundbreaking generative AI technology into its own software products. The deal promises Microsoft a massive share of profits until its investment is recouped.
Microsoft plans to invest up to $10 billion into OpenAI, the startup behind the wildly popular ChatGPT chatbot. This massive financial commitment builds on a previous $1 billion investment from 2019 and gives Microsoft the opportunity to integrate advanced generative AI technology into a wide variety of its software products. It remains unclear whether this $10 billion figure consists entirely of cash or if it also includes the value of cloud computing services Microsoft provides to the startup.
The potential investment follows a separate effort by venture capitalists to buy OpenAI shares from employees in a secondary market transaction that values the company at around $29 billion. Under the reported terms of the new deal, Microsoft receives 75% of OpenAI's profits until it earns back its initial investment. Once that threshold is reached, Microsoft holds a 49% stake in the company, while other investors take another 49% and OpenAI's nonprofit parent retains a 2% share.
OpenAI currently stands as the undisputed leader in generative AI, a technology category that experts compare in significance to the invention of the web browser or the iPhone. These advanced systems use massive data models to create highly polished original content, ranging from detailed essays and movie scripts to digital art and music. Even in a tough economic climate where investors demand profitability, the widespread potential applications of this technology drive intense interest and massive valuations for the San Francisco-based startup.