Semafor claims that Microsoft has decided to invest $10 billion in OpenAI, the company behind the widely used AI chatbot ChatGPT.
Semafor reported on Tuesday, citing people familiar with the matter, that the deal is part of a funding round with other investors that would value OpenAI at a staggering $29 billion.
It’s not clear if the deal is done or not, but term sheets given to potential investors say that the deal will close on December 31, 2022.
Microsoft is expected to get 75% of OpenAI’s profits until it gets its money back, at which point it will reportedly buy a 49% stake in the company.
When CNBC reached out to Microsoft and OpenAI for comment, neither company responded right away.
The tech community has been discussing ChatGPT for weeks. In other words, the tool is a natural language processing model, and its purpose is to generate text that reads like it was written by a human.
The artificial intelligence model, which is a part of the GPT-3 family of large language models, has been used in many different ways, from making programs to writing essays for school.
Microsoft’s efforts to compete in the web search market, currently dominated by Google, could benefit from a bet on ChatGPT. Despite Bing’s relatively modest market share, the company is optimistic that the partnership will help it gain ground on Google by providing superior search features.
In December, Morgan Stanley put out a report that looked at how ChatGPT could be a problem for Google. According to the bank’s top Alphabet analyst, Brian Nowak, language models have the potential to “disrupt Google’s position as the entry point for people to the Internet” and gain market share.
Sam Altman, an entrepreneur from Silicon Valley, started OpenAI in 2015, and in late November of that year, they released their ChatGPT to the general public. Even though there are high hopes for the project’s future success, it is quickly running out of money because its huge popularity is putting a huge load on its servers. Altman reported that one million people were using the chat research tool five days after OpenAI released ChatGPT.
