Microsoft invests billions of dollars in ChatGPT-maker OpenAI as AI race heats up

Microsoft on Monday announced a new multi-billion dollar investment in ChatGPT-maker OpenAI as the AI race heats up. The tech giant declined to provide a specific dollar amount. However, as we reported earlier this month, Microsoft was in talks to invest $10 billion in exchange for a 49% stake in the company.

The investment further deepens with the AI startup behind the chatbot popular ChatGPT and sets the stage for more competition with rival Alphabet’s Google. In a blog post, Microsoft Chairman and CEO Satya Nadella said:

“We formed our partnership with OpenAI around a shared ambition to responsibly advance cutting-edge AI research and democratize AI as a new technology platform. In this next phase of our partnership, developers and organizations across industries will have access to the best AI infrastructure, models, and toolchain with Azure to build and run their applications.”

“The past three years of our partnership have been great,” said Sam Altman, CEO of OpenAI. “Microsoft shares our values and we are excited to continue our independent research and work toward creating advanced AI that benefits everyone.”

ChatGPT has been dubbed the best dialogue-based artificial intelligence chatbot when it was first released to the general public late last year. Microsoft was one of the few companies that saw the potential in OpenAI before it became popular as it is today. In July 2019, Microsoft invested $1 billion in OpenAI as part of the effort for the two companies to work together to bring supercomputing technologies.

As part of the funding agreement, the Semafor report said Microsoft will get “75% of OpenAI’s profits until it recoups its initial investment once OpenAI figures out how to make money on ChatGPT and other products like image creation tool Dall-E.”

“On hitting that threshold, Microsoft would have a 49% stake in OpenAI, with other investors taking another 49% and OpenAI’s nonprofit parent getting 2%,” the report said, without clarifying what the stakes would be until Microsoft got its money back.

On November 30, 2022, OpenAI took the internet by storm after it released its dialogue-based AI chatbot called ChatGPT. The new chatbot-powered AI, which has been hailed as a potential game-changer in the world of AI, is a language model trained by OpenAI to interact with humans in a conversational way. ChatGPT has made text- and image-generation a mainstream hit. We even asked ChatGPT to tell us about itself.

Just five days after its launch, ChatGPT crossed one million users, according to a post by Open AI co-founder Sam Altman. To put that in perspective, it took Netflix 3.5 years, Facebook 10 months, Spotify 5 months, and Instagram 2.5 months to reach the one million users mark.

Since its launch about a month ago, ChatGPT has impressed many experts with its writing ability, proficiency in handling complex tasks, and its ease of use. ChatGPT is currently free to use but Altman said the company will at some point charge people to use the chatbot that many said could one day potentially replace humans.

OpenAI was founded in late 2015 by Elon Musk and Sam Altman as a for-profit startup conducting research in artificial intelligence (AI) with the goal of promoting and developing friendly AI in such a way as to benefit humanity as a whole. OpenIA aims to “freely collaborate” with other institutions and researchers by making its patents and research open to the public. Both founders are motivated in part by concerns about existential risk from artificial general intelligence.