Microsoft may be counting out $10 billion to inject into OpenAI

Could ChatGPT be Google's nemesis?

Microsoft is reportedly considering investing $10 billion into OpenAI as it looks towards integrating ChatGPT into its web search engine Bing and Office products.

Rumours that Microsoft wanted to put more money into the San Francisco-based startup, on top of the $1 billion it pledged in 2019, have been spreading for months. The latest whispers report the company is willing to splash $10 billion as part of a new round of funding for OpenAI that includes other investors, which would value the startup at a whopping $29 billion.

Under the reported deal, Microsoft would reap 75 per cent of OpenAI's profits until it claws back its initial $10 billion investment. After it recoups that money, Microsoft would then take a 49 percent stake into the company, with the other investors sharing the other 49 percent, while OpenAI's non-profit parent biz gets the remaining 2 percent. 

Profit margins are allegedly capped, meaning there is a maximum amount of money each investor can expect to make on their returns. It's not clear what that limit is, and the terms and conditions of the deal could change as negotiations continue.

It does feel like an acquisition with extra steps. Or makes us wonder what's holding Redmond back from swallowing up the AI lab.

OpenAI leads in generative AI, and was the first to launch large language models capable of writing text and code, and text-to-image systems to create digital art. Last year, it released two popular applications: DALL-E 2 and ChatGPT. Microsoft has incorporated DALL-E 2 in some of its products already, including Designer, a graphic design app, and is reportedly interested in using ChatGPT to improve its search engine Bing.

ChatGPT could, in theory, help users answer queries more effectively on Bing, giving Redmond's search engine the boost it needs against Google. Rather than type queries in Google, just imagine asking ChatGPT, primed with the latest information and links, instead, and getting the info you need right away.

The biggest technical roadblock standing in the way of that, however, is that language models like ChatGPT are not reliable, and tend to generate outputs that are factually incorrect. Still, the potential capabilities are enough to allegedly cause some executives at Google to fear a ChatGPT-backed Bing challenges its own search engine.

Microsoft is also keen to include ChatGPT's capabilities into some of its other Office products, like Word, PowerPoint, and Outlook, according to reports. The model would help users generate and edit their writing in emails and documents. 

OpenAI and Microsoft have had a close working relationship for years. In 2020, Microsoft announced it had entered a deal with the startup to exclusively license its GPT-3 models, which later led to the AI code pair-programmer tool GitHub Copilot. Meanwhile, OpenAI is a big customer for its Azure cloud computing platform, and has access to a custom AI supercomputer cluster with "more than 285,000 CPU cores and 10,000 GPUs".

The Register has asked Microsoft and OpenAI for comment. ®

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