Microsoft Looking at $10 Billion Investment into ChatGPT

Semafor | Liz Hoffman and Reed Albergotti | Jan 9, 2023

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Microsoft has been in talks to invest $10 billion into the owner of ChatGPT, the wildly popular app that has thrilled casual users and artificial-intelligence experts since its latest software was released last month

  • Original investment: The Information reported in October that Microsoft, which had invested $1 billion in cash and cloud credits into OpenAI in 2019, was in talks to increase its stake.
  • New deal:  The new $10 billion funding would also include other venture firms, would value OpenAI, the firm behind ChatGPT, at $29 billion, including the new investment.
    • Microsoft’s would get 75% of OpenAI’s profits until it recoups its investment.
    • After that threshold is reached, it would revert to a structure that reflects ownership of OpenAI, with Microsoft having a 49% stake, other investors taking another 49% and OpenAI’s nonprofit parent getting 2%.

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  • The Wall Street Journal reported last week that ChatGPT was allowing employees and early investors to sell their shares at a valuation of $29 billion.
  • ChatGPT is bleeding money: Each time someone engages with its chatbot, it costs the company a few cents in computing power, according to Sam Altman, CEO of OpenAI. But it’s going to be spending most of it on Microsoft’s cloud business, which is working hard to reach parity with competitor Amazon Web Services.

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