Money, Power, and AI: The Crumbling Alliance Between OpenAI and Microsoft

The rift between OpenAI and its investment partner Microsoft seems to have emerged a long time ago: the former wants to change the exclusive agreement with Microsoft, while the latter, with its own technology growing, hopes to get rid of its dependence on OpenAI.

According to the latest report released by the American media, there are many disagreements between the two parties - including Microsoft's financial support for OpenAI, the computing power provided by Microsoft to OpenAI, and the differences in basic rules between the two parties - their five-year friendship has cooled down.

Divisive Issues

Last year, OpenAI CEO Sam Altman asked Microsoft CEO Satya Nadella if he would be willing to invest several more billion dollars in OpenAI. At that time, Microsoft had already invested $13 billion in OpenAI.

Nadella initially indicated his willingness to continue to provide financial support to OpenAI. However, according to four informed sources, after OpenAI's board briefly removed Altman in November last year, Nadella and Microsoft began to reconsider this investment.

In the following few months, despite OpenAI's continuous requests to Microsoft for more funds and computing resources to build and run its AI systems, Microsoft remained unmoved. It is reported that the current OpenAI is in financial difficulty and is expected to lose $5 billion this year.

Over the past year, OpenAI has repeatedly tried to negotiate with Microsoft to reduce costs and allow it to purchase computing resources from other companies.

In June this year, Microsoft agreed to set a special exception in the contract, which allowed OpenAI to sign a computing agreement of about $10 billion with Oracle to obtain additional computing resources.

In recent weeks, OpenAI has also negotiated with Microsoft to modify future contracts to reduce the computing power fees charged by Microsoft to OpenAI, but the specific terms are not clear.

This tense relationship indicates a key challenge faced by artificial intelligence startups: these companies depend on the world's technology giants in terms of funding and computing power because these large companies control the large-scale cloud computing systems required by small businesses to develop artificial intelligence.

In addition, when OpenAI received a huge investment from Microsoft, it signed an exclusive agreement to purchase computing power from Microsoft and closely cooperate with this technology giant in new artificial intelligence fields.

However, since the removal of Altman, Microsoft has begun to hedge the risks of betting on OpenAI. Microsoft executives are increasingly worried whether their artificial intelligence business is too dependent on OpenAI.

 

Microsoft Chief Technology Officer Kevin Scott mentioned Microsoft's big bet on OpenAI in an interview, In this cooperative relationship, we have continuously invested in OpenAI at multiple critical moments. We are undoubtedly their largest capital investor.

Microsoft is also continuously developing its own technology. In March this year, Microsoft spent at least $650 million to poach most of the employees from OpenAI's competitor Inflection.

Despite the undercurrents, Altman still maintains a superficial peace. He pointed out in a statement on Thursday (October 17), We are very grateful for the cooperation with Microsoft, their early big bet on us, and the large amount of computing resources they provide, which is crucial for our research breakthroughs and greatly benefits both companies. We are excited and committed to pursuing our common vision to achieve greater goals.

Breakup Terms

The most attractive part of the report may be a clause in the contract between OpenAI and Microsoft: if OpenAI develops so-called artificial general intelligence (AGI), that is, an artificial intelligence system that can match human thinking, then Microsoft will not be able to obtain OpenAI's technology.

The problem is that the OpenAI board can decide when AGI arrives, and CEO Sam Altman has stated that there will be some subjectivity at this moment.

According to reports, the original intention of the clause was to ensure that Microsoft would never abuse this technology, but now it has become an unexpected way for both parties to break up.