The ChatGPT revolution? Microsoft seems to have very big plans for this AI chatbot
Microsoft is reportedly in talks to invest $10 billion into OpenAI, the maker of the popular ChatGPT chatbot, according to a report citing people familiar with deal.
Microsoft is weighing up the $10 billion stake in OpenAI in a deal that would involve multiple venture firms, according to Semafor, which reports documents sent to prospective investors indicated a targeted close by the end of 2022.
Also: What is ChatGPT and why does it matter? Here's what you need to know
The Wall Street Journal reported last week that OpenAI was in talks to sell existing shares in a tender offer that would value it at around $29 billion. Semafor also reports the $10 billion in funding, which includes Microsoft and other venture firms, would value OpenAI at $29 billion
OpenAI started as a non-profit but in March 2019 created OpenAI LP as a "capped profit" -- a hybrid for-profit and nonprofit -- in order to attract employees and investors and offer them capped returns if it reaches its goals. Any return beyond that amount would go back to the OpenAI nonprofit. OpenAI said at the time it would need to invest billions of dollars in coming years in large-scale cloud computing and AI supercomputers. Then, in July 2019, Microsoft invested $1 billion in OpenAI in exchange for the startup pursuing Artificial General Intelligence on Microsoft's Azure AI supercomputing technologies.
According to Semafor's sources, after the new funding injection, Microsoft would get 75% of OpenAI's profits until it recoups its investment. After this point is reached, profit sharing would reflect each party's stake of in OpenAI: Microsoft would take 49%, other investors would get 49%, and OpenAI's nonprofit parent would get 2%.
ChatGPT wowed the world upon its release in November with its natural-sounding answers to prompts about literature, politics, science, and coding, as well as offering follow-up questions. Google's management has reportedly issued a "code red" alert over the technology for its potential to upend online search.
Also: People are already trying to get ChatGPT to write malware
ChatGPT and AI models in general are expensive to run, and for now, ChatGPT answers are unreliable. Stack Overflow banned ChatGPT-generated answers on the Q&A site because its moderators were overwhelmed with believable-looking but false answers.
News of Microsoft's potential investment follows a report by The Information last week that Microsoft could integrate ChatGPT with Bing to enhance its search engine. The Information reported this week that Microsoft could incorporate ChatGPT into its Office apps to expand its existing AI effects like autocomplete and suggestions in Word, PowerPoint and Outlook.
Also: OpenAI's ChatGPT is scary good at my job, but it can't replace me (yet)
ChatGPT has caused alarm at some schools and universities where fears are mounting that students will submit ChatGPT-generated essays. New York City Department of Education last week banned ChatGPT on its networks and devices but said it would grant access if it was to study the technology behind the chatbot. The school department said it was concerned about ChatGPT's "negative impacts on student learning" and was worried about the "safety and accuracy of content."
ZDNET has asked Microsoft and OpenAI for a comment about the talks and we'll update the story if we receive answers.