Microsoft is in talks to invest $10 billion in OpenAI, the creator of ChatGPT, in a funding round that will value the company at $29 billion, tech news site Semafor reported on Jan. 9.
The news confirmed earlier reports about OpenAI’s latest private-market valuation, which is double what it was worth just a year ago. Microsoft invested $1 billion in OpenAI in 2019. Under the new deal, the tech giant will get 75 percent of OpenAI’s profits until it recoups its initial investment, according to Semafor. After that Microsoft will own 49 percent of OpenAI, with other investors owning another 49 percent and OpenAI’s nonprofit parent company taking the remaining 2 percent.
Tech news site Information reported on Jan. 3 Microsoft is looking to integrate ChatGPT into its search engine Bing to take on competitor Google Search.
OpenAI was founded in 2015 by Elon Musk and venture capitalist Sam Altman as an artificial intelligence research lab with the stated aim of developing “friendly AI” for humanity. The firm expects to generate $200 million in revenue this year and $1 billion in 2024, Reuters reported in December. OpenAI makes money by charging developers a licensing fee every time they use its products.
The new funding round will include other venture investors. Documents sent to prospective investors seen by Semafor said OpenAI aimed to close the deal by the end of 2022. It’s unclear if it has been finalized.
Microsoft declined to comment on the deal. OpenAI could not be immediately reached for comment.