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According to a media report, Microsoft wants to acquire further stakes in OpenAI.

Tech leaks website The Information reports that OpenAI is in talks with Microsoft for additional funding. Microsoft joined OpenAI in the summer of 2019 with a multi-year investment of $1 billion. In fall 2020, Microsoft bought exclusive rights with code access to GPT-3 speech AI. Regular OpenAI partners and customers can only access GPT-3 via the API.

More AI for the Azure Cloud?

The Information speculates that Microsoft could tie OpenAI even more closely to its Azure Web Services with another deal, in part to keep OpenAI services like GPT-3 and DALL-E 2 away from Amazon Web Services and the Google Cloud.

In the big tech cloud competition, generative AI services could become an important competitive feature in the future, if it is not already. The OpenAI partnership could give Microsoft an edge.

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Google has its own AI models for text, image, video, and 3D generation in development, which are not yet commercially available, primarily for ethical reasons. However, it should only be a matter of time before Google also offers these generative AI systems as a cloud service.

Microsoft uses the GPT-3 derivative Codex for Github Copilot and Power Apps, among others, and offers fine-tuned GPT-3 models to enterprise customers. Most recently, Microsoft announced the integration of DALL-E 2 into Microsoft 365 office software.

OpenAI reportedly has a sky-high valuation

According to The Information’s sources, some OpenAI shareholders sold their shares last year to investors such as Sequoia Capital, Tiger Global Management, Bedrock Capital and Andreessen Horowitz.

The price per share is said to result in a company valuation of $20 billion, with projected revenue in the low double-digit millions for 2022. If these figures are correct, OpenAI’s valuation would be 500 to 800 times the expected revenue.

Investors buying shares of OpenAI at this price need to see more in the company than high-quality text and image generation. OpenAI itself is positioning itself as one of the leaders in the race for potentially humanity-changing general AI.

Recommendation

At the launch of DALL-E 2, OpenAI co-founder Sam Altman predicted major upheavals in the job market brought about by AI. “You say what you want in natural language or with contextual clues, and the computer does it. We offer this for code and now image generation; both of these will get a lot better. […] We can imagine an ‘AI office worker’ that takes requests in natural language like a human does,” Altman writes.

Jasper AI, an AI startup that specializes in creating text and images for marketing, is expected to reach $80 million in revenue in 2022, representing more than 100 percent year-over-year growth. In 2021, revenue is expected to have been just $30 million. Jasper AI recently received $125 million in its first round of investment.

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Summary
  • Microsoft and OpenAI are in talks about further funding, according to a report.
  • Microsoft has already bought into OpenAI for $1 billion in 2019, integrating the GPT-3 text AI and DALL-E 2 image AI into its own products.
  • OpenAI's company valuation is said to have been $20 billion last year - a hundred times its actual revenue in the low double-digit millions.
Sources
Online journalist Matthias is the co-founder and publisher of THE DECODER. He believes that artificial intelligence will fundamentally change the relationship between humans and computers.
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