Microsoft was only identified as a technical partner in the Stargate joint venture, which was created by OpenAI, SoftBank Group Corp., and Oracle Corp., even though the company had invested over $14 billion in OpenAI and was utilizing the AI models developed by the firm for its next-generation cloud services. The software behemoth then stated in a blog post that OpenAI might weaken an exclusivity pact by using competitor cloud services to train and execute its AI models with Microsoft's consent.
Despite the fact that both parties now stand to gain more by working together than from working separately, Bloomberg reports that the rush of announcements sparked fresh rumors that the Microsoft-OpenAI partnership has considerably deteriorated. One thing is certain: As time has gone on, Microsoft has grown less inclined to invest even more funds in funding the processing power OpenAI needs to maintain its leadership position in artificial intelligence.According to those with knowledge of the matter, Microsoft was on the verge of agreeing to invest tens of billions of dollars in OpenAI in 2023. Sam Altman, the CEO of OpenAI, was discussing with Microsoft at the time how he could help finance a significant expansion of AI infrastructure with investors in Asia and the Middle East. Those goals would probably have been advanced by any Microsoft investment.
The fragility at the core of OpenAI was then revealed when Altman was momentarily sacked. One of the sources, who asked not to be named in order to speak about confidential discussions, claimed that although Altman was reinstated as CEO, the turmoil caused Microsoft to shelve plans to increase its investment. Since then, Altman's infrastructure plans have undergone multiple revisions, but Microsoft CEO Satya Nadella has lost interest in making large contributions.
Microsoft's intended investment in OpenAI was originally disclosed by the New York Times.
In the most recent $6.6 billion fundraising round for OpenAI, Microsoft did provide $750 million. However, their reluctance to commit more led Altman to seek out alternative partners and protest a clause in the contract that obliged OpenAI to purchase all of its cloud capacity from Microsoft by 2030.
One of the persons claims that Microsoft may eventually invest in an OpenAI infrastructure project, including maybe Stargate, and that Nadella and Altman have discussed the latter's goals to significantly increase computing capacity on numerous occasions.
According to a person familiar with the matter, OpenAI need additional processing power to achieve its goals, and businesses of its size typically collaborate with multiple partners. According to the individual, the updated agreement between OpenAI and Microsoft shows that the two businesses are still closely collaborating.
According to those familiar with Microsoft's thinking, the corporation sees the updated agreement with OpenAI as beneficial. Though the value of that investment may alter as the startup attempts to restructure as a for-profit, the software giant still keeps its portion of OpenAI's earnings and is the biggest investor in a business that might now grow even more valuable. Additionally, even if OpenAI models are trained in a data center supported by Softbank or Oracle, Microsoft still has access to them.
Microsoft is also able to shift some of its AI expenditures to competitors through the Stargate joint venture and its restructured agreement with OpenAI. For a business that has committed to spending $80 billion on capital projects this fiscal year and is monetizing those investments more slowly than Wall Street would like, that is a good development.
Elon Musk has already turned Stargate into a lightning rod, claiming that the project's backers don't have enough money to realize their goals. Hours after the announcement, Musk said on his social media site X, "They don't actually have the money." “On the other hand, Satya definitely does have the money,” Musk wrote later.
The CEO of Microsoft responded to that by resigning.
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