Microsoft to invest $10 billion in OpenAI, creator of ChatGPT

Microsoft to invest $10 billion in OpenAI, creator of ChatGPT

Microsoft to invest $10 billion in OpenAI, creator of ChatGPT

Microsoft said on Monday it was making a “multi-billion dollar, multi-year” investment in OpenAI, the San Francisco artificial intelligence lab behind experimental online chatbot ChatGPT.

The companies did not disclose specific financial terms of the deal, but a person familiar with the matter said Microsoft would invest $10 billion in OpenAI.

Microsoft had already invested over $3 billion in OpenAI, and the new deal is a clear indication of how important OpenAI’s technology is to Microsoft’s future and how it competes with other big tech companies like Google. , Meta and Apple.

With Microsoft’s deep pockets and OpenAI’s cutting-edge artificial intelligence, companies hope to stay at the forefront of generative artificial intelligence – technologies that can generate text, images and other media in response to short prompts. After its surprise release in late November, ChatGPT — a chatbot that answers questions in clear, well-punctuated prose — has become the symbol of a new wave of more powerful AI.

The result of more than a decade of research at companies like OpenAI, Google, and Meta, these technologies are poised to remake everything from online search engines like Google Search and Microsoft Bing to photo and graphics editors like Photoshop. .

The deal follows Microsoft’s announcement last week that it had started laying off employees as part of an effort to cut 10,000 jobs. The changes, including severance, termination of leases and what he called “changes to our hardware portfolio,” would cost $1.2 billion, he said.

Satya Nadella, the company’s chief executive, said last week that the cuts would allow the company to refocus on priorities such as artificial intelligence, which he called “the next big wave in computing”.

Nadella made it clear in his company’s announcement on Monday that the next phase of the OpenAI partnership will focus on bringing tools to market, saying “developers and organizations across all industries will have access to the best AI frameworks, models and tool chains”. .”

OpenAI was created in 2015 by a small group of entrepreneurs and artificial intelligence researchers, including Sam Altman, head of start-up builder Y Combinator; Elon Musk, billionaire CEO of electric car maker Tesla; and Ilya Sutskever, one of the most important researchers of the past decade.

They founded the lab as a non-profit organization. But after Mr. Musk left the company in 2018, Mr. Altman remade OpenAI into a for-profit company so it could raise the funds needed for its research.

A year later, Microsoft invested a billion dollars in the company; over the next few years, he quietly invested an additional $2 billion. These funds paid for the massive amounts of computing power needed to create the kind of generative AI technologies that OpenAI is known for.

OpenAI is also in talks to strike a deal in which it would sell existing shares in a so-called tender offer. That could total $300 million, depending on how many employees agree to sell their shares, according to two people familiar with the discussions, and would value the company at around $29 billion.

In 2020, OpenAI built a revolutionary AI system, GPT-3, which could generate text on its own, including tweets, blog posts, news articles, and even computer code. Last year it unveiled DALL-E, which allows anyone to generate photorealistic images simply by describing what he or she wants to see.

Based on the same technology as GPT-3, ChatGPT showed the general public just how powerful this type of technology could be. More than a million people tested the chatbot in its first days online, using it to answer trivial questions, explain ideas, and generate everything from poetry to essays.

Microsoft has already integrated GPT-3, DALL-E and other OpenAI technologies into its products. Most notably, GitHub, a popular online service for programmers owned by Microsoft, offers Copilot, a tool that can automatically generate computer code snippets.

Last week, it extended the availability of several OpenAI services to customers of Microsoft’s Azure cloud computing offering, and said ChatGPT is “coming soon.”

The company said it expects to release its latest quarterly results on Tuesday, and investors expect the tough economy, including lower personal computer sales and more cautious business spending, to weigh further on income.

Microsoft has faced slowing growth since late summer, and Wall Street analysts expect new financial results to show its slowest growth since 2016. But the company is still producing profits and substantial cash. It continued to return money to investors through quarterly dividends and a $60 billion share buyback program authorized by its board in 2021.

Microsoft and OpenAI say their goals are even higher than a better chatbot or programming assistant.

OpenAI’s stated mission was to build an artificial general intelligence, or AGI, a machine capable of doing anything the human brain can do. When OpenAI announced its initial deal with Microsoft in 2019, Nadella described it as the kind of lofty goal a company like Microsoft should pursue, likening AGI to the company’s efforts to build a quantum computer, a machine that would be exponentially faster than today’s machines.

“Whether it’s our pursuit of quantum computing or the pursuit of AGI, I think you need these high-ambition North Stars,” he said.

It’s not something researchers necessarily know how to build. But many believe that systems like ChatGPT are a path to this noble goal.

In the short term, these technologies are a way for Microsoft to expand its business, increase revenue, and compete with Google and Meta, which also approach AI advances with a sense of urgency.

Sunda Pichai, chief executive of Google’s parent company Alphabet, recently declared a “code red”, reversing plans and reinvigorating AI development. Google plans to unveil more than 20 products and demonstrate a version of its search engine with chatbot functionality this year, according to a slide presentation reviewed by The New York Times and two people with knowledge of the plans, which didn’t were not allowed to discuss it.

But new AI technologies come with a long list of flaws. They often produce toxic content, including misinformation, hate speech, and images that are harmful to women and people of color.

Microsoft, Google, Meta and other companies have been reluctant to release many of these technologies because they could harm their established brands. Five years ago, Microsoft launched a chatbot called Tay, which generated racist and xenophobic language, and quickly pulled it from the internet after user complaints.

Nico Grant contributed report.


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