By: Craig Kennedy
On Monday, Microsoft and OpenAI announced a significant expansion of their long-term partnership with a multi-year, multibillion dollar investment. Although the total amount has not been made public, rumors have been swirling for weeks about an investment upwards of $10 billion in OpenAI with Microsoft acquiring a minority ownership in the company.
OpenAI’s Long History with Microsoft
Both companies have a long track record of mutual collaboration. This deal represents the third phase of a long-standing partnership that officially began back in 2019 when Microsoft invested $1 billion in OpenAI.
That initial investment was a mix of cash and Microsoft Azure service credits which locked it in as the exclusive cloud provider of OpenAI services. They also made an additional investment again in 2021, rumored to be in the several billion-dollar range.
Even prior to the initial investment, OpenAI’s founders chose Microsoft Azure to run their deep learning models as early as 2016.
How Does This Benefit OpenAI?
Microsoft has committed to provide specialized supercomputing systems that will enable OpenAI to accelerate its research activities as it drives towards achieving its mission of artificial general intelligence (AGI).
It also puts OpenAI in a strong financial position to feed its insatiable appetite for more and more compute cycles needed to power and train its sophisticated AI models on larger and larger data sets.
How Does This Benefit Microsoft?
On the surface, Microsoft appears to be the big winner in this partnership. Their plans on integrating OpenAI’s technologies across its consumer and enterprise products. This is a huge win as this technology has the potential to significantly improve their suite of office products and its business applications targeted at enterprises.
But that’s not all, Microsoft has already made OpenAI’s models directly available to developers in its Azure OpenAI Service, and there are plans to incorporate OpenAI’s ChatGPT technology into Microsoft Bing. This enhancement to Bing has the potential to be a game-changer for Microsoft and could be the first real challenger capable of taking on Google’s search dominance.
Bottom Line:
While this could be perceived as just one more investment by Microsoft in OpenAI, it really is an indication of a serious long-term partnership between the two technology leaders and bodes very well for both companies. This has the potential to take Microsoft’s entire product offerings to the next level by infusing them all with AI that actually works.
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This blog is a part of the Digital Operations blog series by Aragon Research’s Sr. Director of Research, Craig Kennedy.
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