Microsoft holds 27% of OpenAI in revamped partnership
Sign up now: Get ST's newsletters delivered to your inbox
ChatGPT maker OpenAI is transitioning to a public benefit corporation structure.
PHOTO: REUTERS
Follow topic:
- Microsoft and OpenAI restructured their partnership, granting both greater independence whilst maintaining close collaboration.
- Microsoft retains a 27% stake in OpenAI (valued at $135B) and extended intellectual rights to 2032.
- OpenAI gains flexibility to develop products with others, with Microsoft free to pursue AGI independently.
AI generated
SAN FRANCISCO - Microsoft and OpenAI announced on Oct 28 a sweeping overhaul of their landmark artificial intelligence partnership, giving both companies greater independence while maintaining their close collaboration.
Microsoft will hold approximately 27 per cent of the restructured OpenAI, an investment valued at roughly US$135 billion (S$174 billion), as the ChatGPT maker transitions to a public benefit corporation structure, according to a blog post on the OpenAI website.
OpenAI has also committed to purchasing US$250 billion in Azure cloud services from the tech giant, though Microsoft no longer holds first refusal rights as OpenAI’s compute provider.
In the deal, Microsoft’s intellectual rights for both OpenAI’s models and products are extended through 2032.
“As we enter the next phase of this partnership, we’ve signed a new definitive agreement that builds on our foundation, strengthens our partnership, and sets the stage for long-term success for both organisations,” the companies said in a joint statement.
Microsoft has been a key investor in the ChatGPT-maker as the company became the major player in the spending frenzy around generative AI, the technology that Silicon Valley believes will soon take over important aspects of everyday life.
But OpenAI, under the leadership of chief executive officer Sam Altman, has increasingly looked to expand its partnerships with other companies, raising questions whether its deal with Microsoft was any longer tenable.
The partnership began in 2019 when Microsoft invested US$1 billion in what was then a small AI research organisation founded in 2015 by tech luminaries including Elon Musk.
Microsoft deepened its commitment in 2021 with additional funding, and again in January 2023 with a reported US$10 billion investment following the explosive popularity of OpenAI’s ChatGPT chatbot, which launched in November 2022.
The partnership transformed both companies.
OpenAI evolved from a research lab into one of the world’s most valuable startups, while Microsoft initially gained a commanding position in the AI race, integrating OpenAI’s technology – rebranded as Copilot – across its product lineup from Bing search to Office applications.
The relationship faced turbulence in November 2023 when OpenAI’s board abruptly fired Mr Altman, only to reinstate him days later following an employee revolt and pressure from Microsoft.
The episode exposed tensions over OpenAI’s governance and direction as it balanced its nonprofit origins with commercial ambitions. The new deal with Microsoft is part of OpenAI’s revamp of its company structure to prevent further instability and attract new investors.
The arrangement will see OpenAI given more flexibility in its future including the ability to develop products with third parties and serve some of its products on competing cloud platforms.
Microsoft, meanwhile, can independently pursue AGI development alone or with other partners.
This refers to the pursuit of artificial general intelligence, a level of AI development that matches or exceeds human capability and was a crucial aspect in the company’s previous agreements. AFP
