Microsoft is investing $10 billion in OpenAI, the creator of ChatGPT

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

The companies have not disclosed the exact financial terms of the deal, but a person familiar with the matter said Microsoft would invest $10 billion at OpenAI.

Microsoft had already invested more than $3 billion in OpenAI, and the new deal is a clear indication of the importance of OpenAI 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 artificial intelligence, companies are hoping to stay on top Generative artificial intelligence — Technologies that can generate text, images, and other media in response to brief prompts. After its surprise release at the end of November, ChatGPT — a chatbot that answers questions in clear, well-punctuated language – became a symbol of a new and more powerful AI wave

These technologies are the result of more than a decade of research at companies like OpenAI, Google and Meta and ready to redesign everything Online search engines such as Google Search and Microsoft Bing to Photo and graphic editors such as Photoshop.

The deal follows Microsoft’s announcement last week that it had begun laying off employees to do so Sort out 10,000 positions. The changes, including severance payments, lease terminations and so-called “changes to our hardware portfolio,” would cost $1.2 billion, it said.

Satya Nadella, the company’s chief executive, said last week that the cuts would allow the company to refocus on priorities like artificial intelligence, which he called “the next big 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 tools to market, saying that “developers and organizations from all industries will have access to the best AI infrastructure.” , the best models and the best tool chain .”

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

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

A year later Microsoft invested a billion dollars in the company; in the next few years, it quietly invested another $2 billion. These funds funded the massive amounts of computing power needed to develop the kind of generative AI technologies that OpenAI is known for.

OpenAI is also in talks to finalize a deal in which it would sell existing shares in a so-called takeover bid. That could add up to $300 million, depending on how many employees agree to sell their shares, according to two people with knowledge of the discussions, valuing the company at around $29 billion.

In 2020 OpenAI was built a milestone AI system, GPT-3, which could generate text itself, including tweets, blog posts, news articles, and even computer code. It was presented last year DALL-Ethat allows anyone to create 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 how powerful this type of technology can be. More than a million people tested the chatbot online in the first few days, answering trivia questions, explaining ideas, and creating everything from poetry to term papers.

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 snippets of computer code.

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

The company said it plans to report its latest quarterly results on Tuesday, and investors expect the difficult economic environment, including slower PC sales and more cautious corporate spending, to further impact earnings.

Microsoft has faced slowing growth since late summer, and Wall Street analysts expect the new financial results to show the slowest growth since 2016. But the company still generates significant profits and cash. It has continued return money to investors through quarterly dividends and a $60 billion stock repurchase program approved by the board in 2021.

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

OpenAI’s stated mission was to build artificial general intelligence, or AGI, a machine that can do anything the human brain can do. When OpenAI announced its first deal with Microsoft in 2019, Nadella described it as the kind of ambitious goal a company like Microsoft should pursue, comparing 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 AGI, I think you need these ambitious North Stars,” he said.

This is something researchers don’t necessarily know how to build. But many believe systems like ChatGPT are a path to that lofty goal.

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

Sundar Pichai, the CEO of Google’s parent company Alphabet, recently declared a “code red‘ to turn plans on their head and jumpstart AI development. Google intends to unveil more than 20 products this year and demonstrate a version of its search engine with chatbot capabilities, according to a slide presentation reviewed by The New York Times and two people with knowledge of the plans who weren’t authorized to discuss them.

But the new AI technologies have a long list of shortcomings. They often produce toxic content, including misinformationHate speech and images biased against women and people of color.

Microsoft, Google, Meta and other companies were reluctant to release many of these technologies because they could damage their established brands. Five years ago, Microsoft released a chatbot called Tay that generated racist and xenophobic language and quickly removed it from the web after user complaints.

Nico Grant contributed reporting.