Microsoft is investing $10 billion in ChatGPT creator OpenAI, says a report

Microsoft He plans to invest $10 billion in OpenAI, the startup behind popular artificial intelligence tool ChatGPT, according to a report by Semaphore.

The deal is part of a funding round with other investors that would value OpenAI at a whopping $29 billion, Semaphore reported Tuesday, citing people familiar with the matter.

Semaphore reports that it is not clear if the deal has been completed, but term papers sent to potential investors indicated that the plan was to close the deal by the end of 2022.

Microsoft will reportedly receive 75% of OpenAI’s profits until it makes back the money from its investment, after which the company will receive a 49% stake in OpenAI.

Microsoft and OpenAI were not immediately available for comment when contacted by CNBC.

The OpenAI logo displayed on a phone screen and the ChatGPT website displayed on a laptop screen are seen in this illustration photo taken in Krakow, Poland on December 5, 2022.

Jacob Borzycki | Norphoto | Getty Images

For several weeks, the tech world has been buzzing with chatter about ChatGPT. The tool is a natural language processing paradigm, which means it is designed to generate text that looks as if it was written by a human.

The AI ​​model, itself a variant of the GPT-3 family of large language models, has been used for everything from code development to writing college essays.

A bet on ChatGPT could help Microsoft boost its web search efforts, a market it dominates The Google. The company’s Bing browser only has a small share of the global search engine market, but it’s hoped the deal will help the company chip away at Google’s dominance by offering more advanced search capabilities.

In December, Morgan Stanley published a report examining whether ChatGPT is a threat to Google. Brian Novak, senior bank analyst at Alphabet, writes that language models could take market share “and disrupt Google’s position as the entry point for people on the Internet.”

OpenAI, which was founded by Silicon Valley entrepreneur Sam Altman in 2015, released ChatGPT to the public in late November. Despite optimism about its potential, the project is spending money due to the huge level of stress on its servers caused by its proliferation. Five days after OpenAI released ChatGPT, Altman He said The chat search tool has over 1 million users.

Read the full report on the Semaphore website.

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