Follow
Follow

How will Microsoft monetize OpenAI? Negotiations and billions of dollars on the table

Auto Draft
Auto Draft

It is difficult to find a more media-related start-up related to artificial intelligence than OpenAI. The company led by Sam Altman took the media mainstream by storm and is still known today even by those who are not particularly interested in technology. This is mainly due to ChatGPT, currently the most popular chatbot and multi-tasking tool in the world.

It is not really surprising that this entity is a tempting target for many technological giants. Relatively recently, information appeared confirming that this company in the next round of financing, it raised a total of over $150 million. It can be said that this is a kind of loan of trust for Altman, who, together with the company’s management, faces a considerable task, which is the commercialization of the project and its further development in the scientific field.

Despite all this, Microsoft has currently become a very active player. The American giant decided to enter into negotiations aimed at determining what share of OpenAI’s profits and ownership structure will fall to individual investors.. There are many indications that the company responsible for ChatGPT is facing serious changes.

Microsoft and OpenAI negotiations – challenges and complicated company structure

How will Microsoft monetize OpenAI? Negotiations and billions of dollars on the table
How will Microsoft monetize OpenAI? Negotiations and billions of dollars on the table

OpenAI has a really unclear future.

However, it is worth starting with some outline of the general situation and structure at OpenAI. The activities of the company responsible for creating and delivering ChatGPT were firmly rooted in the model non-profit. This was to ensure that technologies developed by this entity were not created solely for financial gain.

For this reason, at some stage it was decided to choose a rather interesting method of settling accounts with investors. This is done on principle capped-profit, where profits are limited to a certain level. The rest is spent on further research and development of model-based AI non-profit

This solution, although consistent with the company’s mission, poses an additional challenge in negotiations with investors who may seek to maximize their return on investment. This is what is happening and the latest reports confirm it.

OpenAI has two years to achieve its first significant profits. If the company does not start generating sufficient revenues, investors from the last round of financing – including Nvidia, Thrive Capital and SoftBank – may demand a return of the funds provided. This means that the financial success of OpenAI is crucial not only for Microsoft, but also for many other investors who expect a specific return on their invested capital. This is a huge responsibility that rests on Altman himself and the entire management board of the entity.

Huge investments by Microsoft and very close cooperation with OpenAI

How will Microsoft monetize OpenAI? Negotiations and billions of dollars on the table
How will Microsoft monetize OpenAI? Negotiations and billions of dollars on the table

Microsoft, as the largest investor in OpenAI, has very serious plans and intentions for this company.

Microsoft has been intensively financing and supporting OpenAI since 2019, seeing this cooperation as an opportunity to gain a strategic advantage in the AI ​​market. Since the initial contribution, the Redmond giant has invested a total of $13.75 billion in the entity behind ChatGPT. This is what makes the Redmond giant the largest investor in the company led by Sam Altman.

But as the company’s value and commercialization have grown, questions have arisen about how exactly Microsoft – and other investors – should divide profits and control over this transforming company. Therefore, in the near future, OpenAI and Microsoft will begin key negotiations aimed at determining what share of OpenAI’s profits and ownership structure will fall to individual investors. However, the cooperation between the two companies does not end there.

The companies are closely linked not only financially but also technologically. Microsoft is the exclusive cloud service provider for OpenAI, which means that all data processing necessary to run advanced AI models such as ChatGPT takes place in the Azure cloud. At the same time, Microsoft is intensively implementing its partner’s technology into its products, such as Copilot AI in the Office suite, which allows for the wide use of artificial intelligence tools in users’ daily work.

Will OpenAI lose its independence to Microsoft?

How will Microsoft monetize OpenAI? Negotiations and billions of dollars on the table
How will Microsoft monetize OpenAI? Negotiations and billions of dollars on the table

The future of not only Sam Altman, but the entire market will depend on Microsoft’s negotiations with OpenAI.

Seeing how much connections both companies have with each other, the question may arise: what will happen to OpenAI’s independence? Microsoft’s ambitions are no big secret, especially visible in its attempts to advertise and push further tools based on artificial intelligence.

On the other hand, the Windows operating system vendor may currently be treading on very thin ice by trying to exert too much influence on the Sam Altman-led entity. After all, too much interference in such a large and, above all, media company may attract the attention of market and competition authorities.

Therefore, the negotiations between Microsoft and OpenAI will be a kind of precedent for this market branch. For this reason, the eyes of many technological giants will be focused on these two, and the future image of the entire AI market will depend on the course of these negotiations.