Microsoft Is Reportedly Set To Invest $10 Billion In ChatGPT’s Creator

Microsoft is reportedly in talks to invest $10 billion in OpenAI, the startup behind ChatGPT, the popular AI tool that took the world by storm, according to a report by Semanfor. The deal is reported to be a part of a funding round with a handful of other investors that will see the valuation of OpenAI go up to $29 billion, according to sources familiar with the matter. “It’s unclear if the deal has been finalized but documents sent to prospective investors in recent weeks outlining its terms indicated a targeted close by the end of 2022,” Semanfor reported.

The deal will reportedly see Microsoft gain a 75 percent share of OpenAI’s profits until it makes back the money on its investment. The company will then assume a 49 percent stake in OpenAI. 

In its report, Semanfor wrote that “Microsoft’s infusion would be part of a complicated deal in which the company would get 75 percent of OpenAI’s profits until it recoups its investment, the people said…After that threshold is reached, it would revert to a structure that reflects ownership of OpenAI, with Microsoft having a 49% stake, other investors taking another 49% and OpenAI’s nonprofit parent getting 2%. There’s also a profit cap that varies for each set of investors — unusual for venture deals, which investors hope might return 20 or 30 times their money. The terms and the investment amount could change, and the deal could fall apart.”

OpenAI was founded in 2015 by Silicon Valley entrepreneur Sam Altman. It launched ChatGPT, an AI tool, in November 2022 which crossed 1 million users in less than a week. “The tool is a natural language processing model and is designed to generate text that appears as though a human wrote it. The AI model, itself a variant of the GPT-3 family of large language models, has been used for everything from developing code to writing college essays.”

With ChatGPT, there is the possibility that Microsoft could overtake Google Search in web searches.

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