Microsoft and OpenAI in Talks Over $29 Billion Deal

Microsoft and OpenAI, the company behind the well-known AI chatbot ChatGPT, are reportedly in talks for a merger that would value the latter at $29 billion as the long-standing technology giant pushes in on its long-time rival Google.

Microsoft is in discussions to invest up to $10 billion in OpenAI, the business responsible for the well-known ChatGPT artificial intelligence bot, according to reports.

The merger has been under discussion between the two businesses for months, they added. According to persons familiar with the conversations, Semafor reported late Monday that Microsoft has explored investing $10 billion in OpenAI.

Additional Investors

According to Semafor, the agreement, which would eventually give Microsoft a 49% stake in the startup company, also includes a provision that would see Microsoft receive 75% of OpenAI’s profits up until it recoups its investment, with additional investors taking the remaining 49% and OpenAI holding the remaining 2% of equity.

Late on Monday, Bloomberg matched Semafor’s allegation, but with fewer specifics. According to Bloomberg’s sources, Microsoft has discussed investing up to $10 billion in OpenAI at a valuation of nearly $29 billion.

On November 30, OpenAI released ChatGPT to the general public for free. As a result of users’ awe at how accurately the bot replicated human speech, the application immediately gained popularity. In 2019, Microsoft spent $1 billion in OpenAI, becoming the startup’s only cloud provider. The business also apparently aims to include ChatGPT into its Bing search engine, which reportedly caused Google execs to panic. According to Bloomberg, the businesses have been in discussions for months about Microsoft significantly increasing its stock investment in OpenAI.

According to Reports

OpenAI was reportedly getting close to selling shares at a $29 billion valuation, according to a Wall Street Journal report from last week.

Justin Post and Joanna Zhao noted that any perceived challenge to Google’s dominant market position in search or any shift in the company’s search business model “might be an overhang for the stock,” but they also added that they did not see ChatGPT as a “imminent danger” to Google given its limitations.

San Francisco-based OpenAI, a firm that acquired $1 billion from Microsoft in 2019, made headlines in November when it unveiled its artificial intelligence assistant. Microsoft would receive 75% of the start-income up’s up until it recovered its investment, according to the news website Semafor, which cited persons familiar with the most recent agreement.