Complaints and suspicions are beginning to undermine the alliance between both companies.
Each company is reassessing its options and considering alternative plans.
Everything seemed perfect in the unique partnership between OpenAI and Microsoft. It was a logical alliance: OpenAI provided advancements in artificial intelligence, while Microsoft contributed its computing resources and financial support. Both entities benefited from this collaboration, but the relationship is beginning to show signs of strain.
OpenAI wants more. According to 19 sources cited by The New York Times, both parties are expressing growing suspicions and complaints. Microsoft’s $13 billion investment hasn’t satisfied OpenAI CEO Sam Altman, who continues to seek more funding and better terms for using Microsoft’s cloud services.
Mutual dependency. Like many startups, OpenAI relies on large companies like Microsoft to access their extensive infrastructure of thousands of CPUs and GPUs. Meanwhile, Microsoft depends on OpenAI to integrate and sell its AI solutions. After all, Microsoft’s co-pilots are essentially ChatGPT but branded with Microsoft’s logo.
Demanding better terms. The New York Times reports that OpenAI has been trying to renegotiate the terms of its agreement with Microsoft throughout 2024. The goal is to secure additional computing power at a lower cost. Microsoft CEO Satya Nadella didn’t seem very enthusiastic about this, especially after the turmoil caused by Altman’s firing (and subsequent return) in November 2023. Nadella learned about the situation from third parties, which reportedly left him surprised and furious.
Microsoft has a backup plan. OpenAI’s management crisis was probably one reason why Microsoft sought a clear alternative strategy. This strategy involves creating its own AI models, reducing reliance on OpenAI. To accomplish this, Nadella and his team made a significant move by acquiring generative AI company Inflection AI for $650 million and appointing Mustafa Suleyman, one of its co-founders, to lead Microsoft’s AI initiatives. The New York Times says several executives from OpenAI, including Altman, are reportedly upset about this decision.
OpenAI is also taking action. In June, Microsoft allowed OpenAI to utilize other cloud infrastructures. This led OpenAI to sign a $10 billion deal with Oracle, which will provide the computing capacity for its data centers, while Microsoft will supply the software necessary to leverage that capacity.
Investors are welcome here. OpenAI recently launched a massive investment round to attract new partners. The primary goal is to raise funds for the company’s costly operations, but the team also aims to leverage these partners for future initiatives. Notable investors include Nvidia and MGX, an investment company controlled by the United Arab Emirates. MGX is part of an OpenAI project focused on establishing data centers worldwide.
Tensions are rising. Some sources told The New York Times that several OpenAI employees complained about Suleyman yelling at a staff member during a video call. He reportedly expressed frustration that the startup wasn’t delivering its new technology to Microsoft quickly enough. Meanwhile, OpenAI is also said to be upset that Microsoft engineers downloaded critical software from the company without adhering to the agreed-upon protocols. All this is definitely putting a strain on the partnership.
Not enough power. Some OpenAI employees purportedly feel that Microsoft isn’t providing adequate computing power. They believe that it will be Microsoft’s fault if OpenAI fails to become the first company to develop artificial general intelligence.
No AGI for Microsoft. Lastly, The New York Times reports that there’s a notable clause in the agreement between OpenAI and Microsoft. If OpenAI successfully creates AGI, Microsoft will lose access to OpenAI’s technology. This measure is intended to prevent any potential misuse of such powerful capabilities.
Image | TechCrunch | Heisenberg Media
See all comments on https://www.xatakaon.com
SEE 0 Comment