Microsoft expands relationship with start-up OpenAI in multi-billion dollar deal, in major bet that AI can transform its offerings
The deal represents a major bet that AI can help transform Microsoft’s tools and services, even as the company cuts thousands of jobs.
Earlier reports suggested OpenAI was seeking $10 billion (£8bn) from Microsoft at a $29bn valuation.
Microsoft didn’t disclose the value of what it described as a multi-year deal.
Last week Microsoft said it would cut about 10,000 jobs worldwide, roughly 5 percent of its total staff, making it the latest tech giant to announce major redundancies.
But the company said it would continue to hire in strategic areas, including artificial intelligence.
In a memo to staff last week announcing the cuts, chief executive Satya Nadella said that “the next major wave of computing is being born, with advances in AI”.
Microsoft first invested $1bn into OpenAI in 2019, followed by a further investment in 2021.
The AI firm’s ChatGPT made a sensation when it launched in November, attracting 1 million users in its first week.
The convincing human-like quality of its responses led to speculation it could lead to major advances in markets including education and media, and could even threaten Google’s search dominance.
Microsoft’s initial investment gives it first rights to commercialise the AI technology. Microsoft’s Azure cloud platform also provides OpenAI’s back-end infrastructure.
“Microsoft shares our values and we are excited to continue our independent research and work towards creating advanced AI that benefits everyone,” said OpenAI chief executive Sam Altman.
OpenAI’s other tools include the Dall-E image generator and Codex, which translates English phrases into computer code.