Microsoft (NASDAQ: MSFT) is reportedly lining up $10 billion to invest in ChatGPT owner and creator OpenAI. According to people familiar with the matter, the multinational tech corporation is talking with OpenAI regarding this investment. Should the deal scale through, Microsoft could own up to 49% of OpenAI. Semafor reports that the deal incorporates funding from other venture firms, which will value OpenAI at $29 billion, including the new investment. In addition, other investors could collectively own another 49% of OpenAI, with the platform’s non-profit parent receiving the remaining 2%.
Reports also state that a profit cap varies for each set of investors, which is unusual for venture deals. However, the terms and the investment amount could change, and the deal could fall apart.
Documents pertinent to the deal were sent to prospective investors in recent weeks. However, whether the deal materialized at its originally targeted time scale for the end of last year remains to be determined.
Current Terms of Proposed Microsoft Deal with ChatGPT Owner
The funding terms of the Microsoft-OpenAI deal would see the tech giant earn 75% of the ChatGPT creator’s profits for a while. This proceeds realization structure would only end after Microsoft has recouped its initial investment once OpenAI starts making money on ChatGPT. Furthermore, the artificial intelligence research laboratory could also figure out how to monetize other products, including the image creation tool Dall-E.
The deal does not specify whether any money spent by OpenAI on Microsoft’s cloud-computing arm would count towards offsetting its account.
Previous reports stated that OpenAI plans to facilitate the sale of shares by employees and early investors at a $29 billion valuation. Furthermore, at the time, venture capital firms, including Thrive Capital and Founders Fund, were purchasing shares from existing shareholders.
According to The Information, last October, Microsoft was in talks with OpenAI to increase its stake in the platform. At the time, the computer software giant already had a $1 billion cash and cloud credits outlay in OpenAI since 2019.
Microsoft also intends to integrate its office suite services, such as Word, Outlook, and PowerPoint with ChatGPT’s functionalities.
Other Ongoing Microsoft Exertions
The Information also reported last week that Microsoft plans to launch a version of its Bing search engine using ChatGPT’s AI. The prominent personal computers and software company could launch the new feature before the end of March. Furthermore, with this launch, Microsoft intends to challenge Google, a wildly popular search engine owned by Alphabet (NASDAQ: GOOGL).
Meanwhile, Microsoft still harbors high hopes for the metaverse as the company angles to be among its leading pioneers. Microsoft chief strategy officer Henry Bzeih recently predicted that metaverse adoption would quicken in the years to come. According to Bzeih, the world would gravitate towards a more profound virtual arena. He also said that a hybrid prototype would hold much appeal for customers and corporate relationships.