Is the Microsoft-OpenAI ‘Bromance’ Beginning to Fray?
Though Sam Altman once called OpenAI’s partnership with Microsoft “the best bromance in tech,” now “ties between the companies have started to fray” reports the New York Times — citing interviews with 19 people “familiar with the relationship”. [Alternate URL here.]
Among other things, Satya Nadella “has said privately that Altman’s firing in November shocked and concerned him, according to five people with knowledge of his comments. Since then, Microsoft has started to hedge its bet on OpenAI,” and reconsidered new investments beyond its initial $13 billion — even as OpenAI expects to lose $5 billion this year
That tension demonstrates a key challenge for AI startups: They are dependent on the world’s tech giants for money and computing power because those big companies control the massive cloud computing systems the small outfits need to develop AI… Over the past year, OpenAI has been trying to renegotiate the deal to help it secure more computing power and reduce crushing expenses while Microsoft executives have grown concerned that their AI work is too dependent on OpenAI… [I]n March, Microsoft paid at least $650 million to hire most of the staff from Inflection, an OpenAI competitor…
In June, Microsoft agreed to an exception in [OpenAI’s] contract, six people with knowledge of the change said. That allowed OpenAI to sign a roughly $10 billion computing deal with Oracle for additional computing resources, according to two people familiar with the deal. Oracle is providing computers packed with chips suited to building AI, while Microsoft provides the software that drives the hardware… While it was looking for computer power alternatives, OpenAI also raced to broaden its investors, according to two people familiar with the company’s plan. Part of the plan was to secure strategic investments from organizations that could bolster OpenAI’s prospects in ways beyond throwing around money. Those organizations included Apple, chipmaker Nvidia, and MGX, a tech investment firm controlled by the United Arab Emirates… Earlier this month, OpenAI closed a $6.6 billion funding round led by Thrive Capital, with additional participation from Nvidia, MGX and others. Apple did not invest, but Microsoft also participated in the funding round.
OpenAI expected to spend at least $5.4 billion in computing costs through the end of 2024, according to documents reviewed by The New York Times. That amount was expected to skyrocket over the next five years as OpenAI expanded, soaring to an estimated $37.5 billion in annual computing costs by 2029, the documents showed… Still, OpenAI employees complain that Microsoft is not providing enough computing power, according to three people familiar with the relationship. And some have complained that if another company beat it to the creation of AI that matches the human brain, Microsoft will be to blame because it hasn’t given OpenAI the computing power it needs, according to two people familiar with the complaints.
Oddly, that could be the key to getting out from under its contract with Microsoft. The contract contains a clause that says that if OpenAI builds artificial general intelligence, or AGI — roughly speaking, a machine that matches the power of the human brain — Microsoft loses access to OpenAI’s technologies.
Read more of this story at Slashdot.
Though Sam Altman once called OpenAI’s partnership with Microsoft “the best bromance in tech,” now “ties between the companies have started to fray” reports the New York Times — citing interviews with 19 people “familiar with the relationship”. [Alternate URL here.]
Among other things, Satya Nadella “has said privately that Altman’s firing in November shocked and concerned him, according to five people with knowledge of his comments. Since then, Microsoft has started to hedge its bet on OpenAI,” and reconsidered new investments beyond its initial $13 billion — even as OpenAI expects to lose $5 billion this year
That tension demonstrates a key challenge for AI startups: They are dependent on the world’s tech giants for money and computing power because those big companies control the massive cloud computing systems the small outfits need to develop AI… Over the past year, OpenAI has been trying to renegotiate the deal to help it secure more computing power and reduce crushing expenses while Microsoft executives have grown concerned that their AI work is too dependent on OpenAI… [I]n March, Microsoft paid at least $650 million to hire most of the staff from Inflection, an OpenAI competitor…
In June, Microsoft agreed to an exception in [OpenAI’s] contract, six people with knowledge of the change said. That allowed OpenAI to sign a roughly $10 billion computing deal with Oracle for additional computing resources, according to two people familiar with the deal. Oracle is providing computers packed with chips suited to building AI, while Microsoft provides the software that drives the hardware… While it was looking for computer power alternatives, OpenAI also raced to broaden its investors, according to two people familiar with the company’s plan. Part of the plan was to secure strategic investments from organizations that could bolster OpenAI’s prospects in ways beyond throwing around money. Those organizations included Apple, chipmaker Nvidia, and MGX, a tech investment firm controlled by the United Arab Emirates… Earlier this month, OpenAI closed a $6.6 billion funding round led by Thrive Capital, with additional participation from Nvidia, MGX and others. Apple did not invest, but Microsoft also participated in the funding round.
OpenAI expected to spend at least $5.4 billion in computing costs through the end of 2024, according to documents reviewed by The New York Times. That amount was expected to skyrocket over the next five years as OpenAI expanded, soaring to an estimated $37.5 billion in annual computing costs by 2029, the documents showed… Still, OpenAI employees complain that Microsoft is not providing enough computing power, according to three people familiar with the relationship. And some have complained that if another company beat it to the creation of AI that matches the human brain, Microsoft will be to blame because it hasn’t given OpenAI the computing power it needs, according to two people familiar with the complaints.
Oddly, that could be the key to getting out from under its contract with Microsoft. The contract contains a clause that says that if OpenAI builds artificial general intelligence, or AGI — roughly speaking, a machine that matches the power of the human brain — Microsoft loses access to OpenAI’s technologies.
Read more of this story at Slashdot.