Microsoft’s latest OpenAI investment opens way to new enterprise services


OpenAI has landed billions of dollars more funding from Microsoft to continue its development of generative artificial intelligence tools such as Dall-E 2 and ChatGPT. A move that is likely to unlock similar investments from competitors — Google in particular — and open the way for new or improved software tools for enterprises large and small.

Microsoft stands to benefit from its investment in three ways. As a licensee of OpenAI’s software it will have access to new AI-based capabilities it can resell or build into its products. As OpenAI’s exclusive cloud provider it will see additional revenue for its Azure services, as one of OpenAI’s biggest costs is providing the computing capacity to train and run its AI models. And as an investor it can expect some return on its capital, although this will be limited by OpenAI’s status as a capped-profit company governed by a nonprofit.

The deal, announced by OpenAI and Microsoft on Jan. 23, 2023, is likely to shake up the market for AI-based enterprise services, said Rajesh Kandaswamy, distinguished analyst and fellow at Gartner: “It provides additional impetus for Google to relook at its roadmap. It’s the same for other competitors like AWS,” he said.

Ritu Jyoti, IDC’s global AI research lead, sees more than just AI bragging rights at stake here. “There is a big battle brewing between the three hyperscalers — Amazon, Google, and Microsoft — and it’s not just about AI. It’s going to drive who’s going to be supreme in the cloud because this requires tons and tons of compute, and they’re all fighting with each other. It’s going to get ugly,” she said.

Employees are already experiencing some of that ugly: Since the start of the year, Microsoft, Amazon, and Google parent Alphabet have all announced massive layoffs as they seek to refocus on growth markets and invest in AI.

Billion-dollar brain

Rumors that Microsoft could invest as much as $10 billion to grow its AI business broke in early… Source

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