Microsoft is currently "in talks" to invest $10 billion into OpenAI, the company behind AI-powered conversational chatbot, ChatGPT (opens in new tab), and AI image generator, DALL-E (opens in new tab).
According to Semafor (opens in new tab), the cash infusion would be part of a larger deal with OpenAI where Microsoft would take a 75% cut of OpenAI's profits until it recoups its investment. After that, Microsoft would own a 49% stake in OpenAI.
This round of funding (including investment from other VC firms) would value OpenAI at $29 billion, according to people familiar with the matter. However, the report says it's not clear whether the deal is final, but documents were sent to 'prospective investors' outlining the terms of the deal at the end of last year.
ChatGPT is an AI chatbot capable of giving long-form answers to open-ended questions conversationally. Folks have since gotten it to write poems, jokes, and even give essay outlines to students.
DALL-E is an AI image generator that creates images based on user input, like "an oil painting of Batman eating a cheeseburger in front of a baby." I'm serious (opens in new tab).
The Information (opens in new tab) reported that Microsoft has been looking to increase its stake in OpenAI since it invested a billion in cash back in 2019. OpenAI CEO Sam Altman said on Twitter (opens in new tab) that the average cost is "probably single-digits cents per chat; trying to figure out more precisely and also how we can optimize it." This was when ChatGPT launched in December last year and crossed the million-user mark.
A few cents per chat may not sound a lot for OpenAI, but when you start getting to millions of chats daily, those costs can add up for a start-up. Microsoft swooping in can help optimize cost on the backend.
Last week, Microsoft announced that it would use the tech behind ChatGPT in a version of Bing in March (opens in new tab), a move the company hopes will draw more people to the search engine. Unfortunately for Microsoft, Bing's most searched word last year was 'Google.' (opens in new tab)