OpenAI Enters 'Tough Negotiation' With Microsoft, Hopes to Raise Money With IPO (msn.com) 9
OpenAI is currently in "a tough negotiation" with Microsoft, the Financial Times reports, citing "one person close to OpenAI."
On the road to building artificial general intelligence, OpenAI hopes to unlock new funding (and launch a future IPO), according to the article, which says both sides are at work "rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation...."
Microsoft, meanwhile, wants to protect its access to OpenAI's cutting-edge AI models... [Microsoft] is a key holdout to the $260bn start-up's plans to undergo a corporate restructuring that moves the group further away from its roots as a non-profit with a mission to develop AI to "benefit humanity". A critical issue in the deliberations is how much equity in the restructured group Microsoft will receive in exchange for the more than $13bn it has invested in OpenAI to date.
According to multiple people with knowledge of the negotiations, the pair are also revising the terms of a wider contract, first drafted when Microsoft first invested $1bn into OpenAI in 2019. The contract currently runs to 2030 and covers what access Microsoft has to OpenAI's intellectual property such as models and products, as well as a revenue share from product sales. Three people with direct knowledge of the talks said Microsoft is offering to give up some of its equity stake in OpenAI's new for-profit business in exchange for accessing new technology developed beyond the 2030 cut off...
Industry insiders said a failure of OpenAI's new plan to make its business arm a public benefits corporation could prove a critical blow. That would hit OpenAI's ability to raise more cash, achieve a future float, and obtain the financial resources to take on Big Tech rivals such as Google. That has left OpenAI's future at the mercy of investors, such as Microsoft, who want to ensure they gain the benefit of its enormous growth, said Dorothy Lund, professor of law at Columbia Law School.
Lund says OpenAI's need for investors' money means they "need to keep them happy." But there also appears to be tension from how OpenAI competes with Microsoft (like targeting its potential enterprise customers with AI products). And the article notes that OpenAI also turned to Oracle (and SoftBank) for its massive AI infrastructure project Stargate. One senior Microsoft employee complained that OpenAI "says to Microsoft, 'give us money and compute and stay out of the way: be happy to be on the ride with us'. So naturally this leads to tensions. To be honest, that is a bad partner attitude, it shows arrogance."
The article's conclusion? Negotiating new deal is "critical to OpenAI's restructuring efforts and could dictate the future of a company..."
On the road to building artificial general intelligence, OpenAI hopes to unlock new funding (and launch a future IPO), according to the article, which says both sides are at work "rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation...."
Microsoft, meanwhile, wants to protect its access to OpenAI's cutting-edge AI models... [Microsoft] is a key holdout to the $260bn start-up's plans to undergo a corporate restructuring that moves the group further away from its roots as a non-profit with a mission to develop AI to "benefit humanity". A critical issue in the deliberations is how much equity in the restructured group Microsoft will receive in exchange for the more than $13bn it has invested in OpenAI to date.
According to multiple people with knowledge of the negotiations, the pair are also revising the terms of a wider contract, first drafted when Microsoft first invested $1bn into OpenAI in 2019. The contract currently runs to 2030 and covers what access Microsoft has to OpenAI's intellectual property such as models and products, as well as a revenue share from product sales. Three people with direct knowledge of the talks said Microsoft is offering to give up some of its equity stake in OpenAI's new for-profit business in exchange for accessing new technology developed beyond the 2030 cut off...
Industry insiders said a failure of OpenAI's new plan to make its business arm a public benefits corporation could prove a critical blow. That would hit OpenAI's ability to raise more cash, achieve a future float, and obtain the financial resources to take on Big Tech rivals such as Google. That has left OpenAI's future at the mercy of investors, such as Microsoft, who want to ensure they gain the benefit of its enormous growth, said Dorothy Lund, professor of law at Columbia Law School.
Lund says OpenAI's need for investors' money means they "need to keep them happy." But there also appears to be tension from how OpenAI competes with Microsoft (like targeting its potential enterprise customers with AI products). And the article notes that OpenAI also turned to Oracle (and SoftBank) for its massive AI infrastructure project Stargate. One senior Microsoft employee complained that OpenAI "says to Microsoft, 'give us money and compute and stay out of the way: be happy to be on the ride with us'. So naturally this leads to tensions. To be honest, that is a bad partner attitude, it shows arrogance."
The article's conclusion? Negotiating new deal is "critical to OpenAI's restructuring efforts and could dictate the future of a company..."
Sam's quest for 11 digits (Score:4, Informative)
Sam and his merry band of gold diggers who fought to get him back in his seat want equity and an IPO to cash out bigly.
Raising cash for the company is not the main goal.
"a high-stakes negotiation" (Score:2)
Microsoft is going to want to have very early access to OpenAI's products and leverage them to get a competitive advantage that carries them for the next few decades. This doesn't mesh well with the very admirable ' mission to develop AI to "benefit humanity" ' that OpenAI hopes to preserve, and more power to them.
"Microsoft is offering to give up some of its equity stake in OpenAI's new for-profit business in exchange for accessing new technology developed beyond the 2030 cut off"
MS doesn't care so much ab
You'll be sorry (Score:1)
"I once preached peaceful coexistence with Windows. You may laugh at my expense - I deserve it." P>-- Jean-Louis Gassee, CEO Be, Inc.
whats the vegas odds on it (Score:2)
Traditionally, a bad move (Score:2)
Getting into business with Microsoft isn't quite as bad as doing so with Apple, but it's not unusual for your businesses working with Microsoft to find Microsoft cloning features and then dumping the company they cloned them from. Few can afford to take on Microsoft's lawyers, fewer can afford a chance to do so and be victorious.
Re:Traditionally, a bad move (Score:4, Insightful)
Getting into business with Microsoft isn't quite as bad as doing so with Apple, but it's not unusual for your businesses working with Microsoft to find Microsoft cloning features and then dumping the company they cloned them from. Few can afford to take on Microsoft's lawyers, fewer can afford a chance to do so and be victorious.
Perhaps OpenAI made a pact with the devil, but their only alternative was to make no deal with anyone at all. OpenAI got $13 billion to become relevant, and absent that investment from Microsoft, the world wouldn't never have known that OpenAI existed.
Microsoft is not an angel in this situation, but they are not the bad guys either. Perhaps OpenAI was looking for a philanthropist instead of an investor, but that was unreasonable.
"$260bn start-up" (Score:3)
At some point you have to stop calling these guys a start-up.
Re: (Score:2)
It's like watching a Crypto bubble (Score:1)
The most disappointing points of the story are a) the suckers fall it for again b) that money could have delivered a lot more real value to a lot more suffering people elsewhere.
GenAI is a theory, a gamble, where the result is ultimately having to invest trust in decisions of an something that makes decisions in a way you don't understand. You would be no better than a peasant staring at stained glass windows.
Its like the fusion power dream of tech, except with no practical value other than to create a new