January 28, 2023

Microsoft said on Monday it was making a “multi-year, multi-billion dollar” investment in OpenAI, the San Francisco artificial intelligence lab behind the 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 has already invested more than $3 billion in OpenAI, and this new deal clearly demonstrates the importance of OpenAI’s technology to Microsoft’s future and its competition with other big tech companies like Google, Meta, and Apple.

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

The product of more than a decade of research inside companies like OpenAI, Google and Meta, the technologies promise to reshape everything from online search engines like Google Search and Microsoft’s Bing to photo and graphics editors like Photoshop.

The deal comes after Microsoft announced last week that it had begun layoffs to eliminate 10,000 jobs. The changes, which include severance pay, lease terminations and what it calls “changes to our hardware mix,” will cost $1.2 billion, it said.

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

In his company’s announcement on Monday, Nadella made it clear that the next phase of the partnership with OpenAI will focus on bringing the tools to market, saying “developers and organizations across industries will have access to the best AI infrastructure.” , model and toolchain.”

OpenAI was founded in 2015 by a small group of entrepreneurs and AI researchers, including Sam Altman, the head of startup Y Combinator; Elon Musk, the billionaire chief executive of electric carmaker Tesla; Musk); and Ilya Sutskever, one of the most important researchers of the past decade.

They started the lab as a non-profit organization. But after Mr. Musk left the venture in 2018, Mr. Altman rebranded OpenAI as a for-profit company in order to raise the money it needed for its research.

A year later, Microsoft invested $1 billion in the company; over the next few years, it quietly invested another $2 billion. The funds pay for the vast amounts of computing power required to build OpenAI’s famous generative AI technology.

OpenAI is also negotiating a deal in which it will sell its existing stake in a so-called tender offer. That could total $300 million, depending on how many employees agree to sell their stock, valuing the company at about $29 billion, according to two people familiar with the discussions.

In 2020, OpenAI built a landmark AI system called GPT-3 that can generate text on its own, including tweets, blog posts, news articles and even computer code. Last year, it launched the DALL-E, which lets anyone generate photorealistic images by describing what they want to see.

Based on the same technology as GPT-3, ChatGPT shows the power of this technology to the public. More than a million people tested the chatbot in its first few days online, using it to answer trivia questions, explain ideas and generate everything from poetry to term papers.

Microsoft has incorporated OpenAI technologies such as GPT-3 and DALL-E into its products. Most notably, GitHub, a popular online service for programmers owned by Microsoft, offers a tool called Copilot that automatically generates snippets of computer code.

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

The company said it plans to report its latest quarterly results on Tuesday, with investors anticipating that economic difficulties, including declining PC sales and more cautious business spending, will further hit revenue.

Microsoft has faced slowing growth since late summer, and Wall Street analysts expect new financial results to show the slowest growth since 2016. But the business still generates healthy profits and cash.it lasts until return money to investors Pass quarterly dividends and a $60 billion share repurchase program authorized by the Board of Directors in 2021.

Both Microsoft and OpenAI say their goals are even higher than better chatbots or programming assistants.

OpenAI’s stated mission is to build artificial general intelligence, or AGI, a machine that can do anything a human brain can do. When OpenAI announced its initial deal with Microsoft in 2019, Nadella described it as a lofty goal that a company like Microsoft should pursue, comparing AGI to the company’s efforts to build a quantum computer, a machine whose speed will be better than today’s machines.

“Whether it’s our pursuit of quantum computing, or our pursuit of AGI, I think you need these ambitious north stars,” he said.

It’s not something a researcher has to know how to build. But many see systems like ChatGPT as a way to achieve this lofty goal.

In the short term, these technologies are a way for Microsoft to expand its business, grow its revenue and compete with the likes of Google and Meta, which are also feeling the urgency of advances in artificial intelligence.

Sunda Pichai, CEO of Alphabet, Google’s parent company, recently announced “Code Red,” upending plans and jump-starting AI development. Google intends to launch more than 20 products this year and showcase a chatbot-enabled version of its search engine, according to a slide presentation reviewed by The New York Times and two people familiar with the matter who were not authorized to discuss the plans.

But the new AI technology has a long list of flaws. They often produce toxic content, including misinformation, hate speech and biased images against women and people of color.

Microsoft, Google, Meta and others have been reluctant to release many of these technologies because they could damage their well-known brands. Five years ago, Microsoft released a chatbot called Tay that generated racist and xenophobic language and quickly removed it from the internet after user complaints.

Nico Grant contributed reporting.



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