Despite a seemingly strong partnership, OpenAI and Microsoft are reportedly engaged in intense negotiations to determine how Microsoft's substantial investment of nearly $13 billion will translate into equity as OpenAI transitions to a for-profit entity. This is said to have stemmed from one incident last year.
According to a report by the New York Times, Microsoft CEO Satya Nadella wanted to continue the investment but OpenAI CEO Sam Altman ’s sacking reportedly shook Microsoft's commitment to investing in the ChatGPT maker.
“Nadella was initially willing to keep the cash spigot flowing. But after OpenAI’s board of directors briefly ousted Mr. Altman last November, Nadella and Microsoft reconsidered,” the report said, citing four people familiar with the talks.
“Over the next few months, Microsoft wouldn’t budge as Open AI , which expects to lose $5 billion this year, continued to ask for more money and more computing power to build and run its AI systems,” the report noted.
What are the problems between Microsoft and OpenAI
OpenAI and Microsoft are in the midst of complex negotiations to finalise their partnership structure, with potential implications for the future of AI. The discussions centre around Microsoft's investment and its corresponding equity stake in OpenAI as the AI startup transitions to a for-profit model.
However, the negotiations have hit a snag. Determining Microsoft's equity share and governance rights in the restructured OpenAI has proven challenging, particularly due to OpenAI's unique shift from a non-profit to a for-profit entity.
Adding to the complexity, OpenAI aims to become a public-benefit corporation, balancing profit with social responsibility. This transition must be completed within two years to avoid potential investor backlash.
Furthermore, recent reports have highlighted growing tensions in the Microsoft-OpenAI relationship. Financial pressures on OpenAI, coupled with Microsoft's increased caution following a brief leadership shakeup at OpenAI last year, have led to a more complex dynamic.
According to a report by the New York Times, Microsoft CEO Satya Nadella wanted to continue the investment but OpenAI CEO Sam Altman ’s sacking reportedly shook Microsoft's commitment to investing in the ChatGPT maker.
“Nadella was initially willing to keep the cash spigot flowing. But after OpenAI’s board of directors briefly ousted Mr. Altman last November, Nadella and Microsoft reconsidered,” the report said, citing four people familiar with the talks.
“Over the next few months, Microsoft wouldn’t budge as Open AI , which expects to lose $5 billion this year, continued to ask for more money and more computing power to build and run its AI systems,” the report noted.
What are the problems between Microsoft and OpenAI
OpenAI and Microsoft are in the midst of complex negotiations to finalise their partnership structure, with potential implications for the future of AI. The discussions centre around Microsoft's investment and its corresponding equity stake in OpenAI as the AI startup transitions to a for-profit model.
However, the negotiations have hit a snag. Determining Microsoft's equity share and governance rights in the restructured OpenAI has proven challenging, particularly due to OpenAI's unique shift from a non-profit to a for-profit entity.
Adding to the complexity, OpenAI aims to become a public-benefit corporation, balancing profit with social responsibility. This transition must be completed within two years to avoid potential investor backlash.
Furthermore, recent reports have highlighted growing tensions in the Microsoft-OpenAI relationship. Financial pressures on OpenAI, coupled with Microsoft's increased caution following a brief leadership shakeup at OpenAI last year, have led to a more complex dynamic.
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