Microsoft to Invest Billions in OpenAI Partnership and ChatGPT Creator

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Microsoft said Monday that it is making a multiyear, multibillion-dollar investment in OpenAI, a startup that is behind the viral ChatGPT chatbot. This substantially bolsters Microsoft's relationship with OpenAI as the software giant looks to expand the use of artificial intelligence in its products.

Microsoft has announced a new partnership with OpenAI, building on the company's previous investments in the organization in 2019 and 2021.

The companies did not disclose the financial terms of the partnership. Microsoft had been discussing investing up to $10 billion in OpenAI, according to people familiar with the matter. A representative for Microsoft declined to comment on the final figure.

OpenAI is in talks to sell existing shares in a tender offer that would value the company at around $29 billion, The Wall Street Journal reported. This would make it one of the most valuable U.S. startups on paper despite generating little revenue.

The investment by Microsoft shows the tremendous resources that the company is devoting toward incorporating artificial-intelligence software into its suite of products. This ranges from its design app, Microsoft Design, to its search app, Bing. The investment will also help bankroll the computing power that OpenAI needs to run its various products on Microsoft's Azure cloud platform.

Microsoft plans to incorporate artificial intelligence (AI) into all of its products and make them available as platforms for other businesses to build on, Chief Executive Satya Nadella said last week at a Wall Street Journal panel at the World Economic Forum’s annual event in Davos, Switzerland. Mr. Nadella said that his company would move quickly to commercialize tools from OpenAI, the research lab behind the ChatGPT chatbot as well as image generator Dall-E 2, which turns language prompts into novel images. He added that Microsoft is committed to making AI technology accessible to everyone, regardless of whether they are a large company or a small startup.

OpenAI, a nonprofit founded in 2015 by technology investor Sam Altman, has long been striving to develop artificial general intelligence (AGI). AGI would allow machines to learn and understand anything humans can, which has been a holy grail for AI researchers. The organization has received $1 billion in pledges from backers such as Tesla Inc. CEO Elon Musk and LinkedIn co-founder Reid Hoffman.

OpenAI released a new suite of products this year that industry observers say represents a major step toward the goal of creating artificial intelligence that can match or exceed human intelligence. This could pave the way for a host of new AI-driven consumer applications.

In the fall, OpenAI launched Dall-E 2, a project that allowed users to generate art from strings of text. Then, on Nov. 30, it made ChatGPT public. ChatGPT has become something of a sensation among the tech community given its ability to deliver immediate answers to questions ranging from “Who was George Washington Carver?” to “Write a movie script of a taco fighting a hot dog on the beach.”

Alphabet Inc.'s Google and Microsoft have each developed AI-generated image and text-language models, but have been slower to release them to the public due to ethical concerns.

In 2019, OpenAI created a for-profit arm and raised $1 billion from Microsoft. The funds were used in part to finance the intensive computing power required to train its artificial-intelligence algorithms. Under the arrangement, OpenAI agreed to use Azure as its exclusive cloud partner. The company also said it would give priority to Microsoft when bringing new products to the market.

Some in the artificial-intelligence community criticized the decision, saying it represented a move away from OpenAI's roots as a research lab that sought to benefit humanity over shareholders. OpenAI said it would cap profits at the company, diverting the remainder to the nonprofit group.