Microsoft Corporation MSFT is reportedly negotiating a $10 billion investment in OpenAI — the owner of ChatGPT, a large language chatbot.
What Happened: The funding, supported by other venture firms, would value OpenAI at $29 billion, people familiar with the matter told the news website Semafor.
There is no clarity if the deal has been finalized but documents sent to prospective investors show that it targeted a close by end of 2022, according to the report.
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The funding by Microsoft is part of a complicated deal in which the company would get 75% of OpenAI’s profits until the Satya Nadella-led tech giant can recover its investment, reported Semafor.
Once the threshold is reached Microsoft will be left with a 49% stake in OpenAI, other investors will receive another 49% and OpenAI’s non-profit parent will get 2%, according to the report.
Microsoft and OpenAI did not immediately respond to Benzinga’s request for comment.
Why It Matters: In 2019, OpenAI was backed by Microsoft with $1 billion in funding.
It was reported earlier that Microsoft is working on launching a ChatGPT-powered version of its search engine Bing to take on rival Google.
ChatGPT is valued at $29 billion, a number based on a report from the Wall Street Journal that pointed out that OpenAI is allowing employees and early investors that sell shares at that valuation, according to Semafor.
Even though OpenAI has achieved such a high valuation, it is bleeding money since each time its chatbot gives answers in not less than 30 words, it costs the company at least 1 cent per answer.
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