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When Microsoft first invested $1 billion in OpenAI in 2019, the deal received no more attention than your average corporate venture round. The startup market was blazing hot, and artificial intelligence was one of many areas attracting mega-valuations, alongside electric vehicles, advanced logistics and aerospace.

Three years later, the market looks very different.

Startup funding has cratered following the collapse of public market multiples for high-growth, money-losing tech companies. The exception is artificial intelligence, specifically generative AI, which refers to technologies focused on producing automated text, visual and audio responses.

No private company is hotter than OpenAI. In November, the San Francisco-based startup introduced ChatGPT, a chatbot that went viral thanks to its ability to craft human-like replies to users’ queries about nearly any topic.

Microsoft’s once under-the-radar investment is now a major topic of discussion, both in venture circles and among public shareholders, who are trying to figure out what it means to the potential value of their stock. Microsoft’s cumulative investment in OpenAI has reportedly swelled to $13 billion and the startup’s valuation has hit roughly $29 billion.

That’s because Microsoft isn’t just opening up its fat wallet for OpenAI. It’s also the arms dealer, as the exclusive provider of computing power for OpenAI’s research, products and programming interfaces for developers. Startups and multinational companies, including Microsoft, are rushing to integrate their products with OpenAI, which means massive workloads running on Microsoft’s cloud servers.

Microsoft is integrating the technology into its Bing search engine, sales and marketing software, GitHub coding tools, Microsoft 365 productivity bundle and Azure cloud. Michael Turrin, an analyst at Wells Fargo, says it could all add up to over $30 billion in new annual revenue for Microsoft, with roughly half coming from Azure.

What does that mean for Microsoft’s investment and broader arrangement?

“It’s so good that I have investors asking me how they pulled it off, or why OpenAI would even do this,” Turrin said in an interview.

However, the financial implications are anything but straightforward.

OpenAI was founded in 2015 as a nonprofit. The structure changed in 2019, when two top executives published a blog post announcing the formation of a “capped-profit” entity called OpenAI LP. The current setup restricts the startup’s first investors from making more than 100 times their money, with lower returns for later investors, such as Microsoft.

After Microsoft’s investment is paid back, it will receive a percentage of OpenAI LP’s profits up to the agreed-upon cap, with the rest flowing to the nonprofit body, an OpenAI spokesperson said. A Microsoft spokesperson declined to comment.

Greg Brockman, an OpenAI co-founder and one of the blog post’s authors, wrote in a 2019 Reddit comment that, for investors, the system “feels commensurate with what they could make investing in a pretty successful startup (but less than what they’d get investing in the most successful startups of all time!).”

It’s an unfamiliar model in Silicon Valley, where maximizing returns has long been the priority of the venture community. Nor does it make much sense to Elon Musk, who was one of OpenAI’s founders and early backers. Several times this year, Musk has tweeted his concerns about OpenAI’s unconventional structure and its implications for AI, particularly given Microsoft’s level of ownership.

OpenAI was created as an open source (which is why I named it ‘Open’ AI), non-profit company to serve as a counterweight to Google, but now it has become a closed source, maximum-profit company effectively controlled by Microsoft,” Musk tweeted in February. “Not what I intended at all.”

Brockman said on Reddit that if OpenAI succeeds, it could “create orders of magnitude more value than any company has to date.” As a major OpenAI investor, Microsoft would benefit.

Aside from its investment, leaning on OpenAI has the potential to help Microsoft dramatically reverse its fortunes in AI, where it’s stumbled publicly and didn’t build a meaningful business on its own. Microsoft pulled the Clippy assistant from Word, Cortana from the Windows taskbar and its Tay chatbot from Twitter.

Unlike areas such as advertising or security, Microsoft hasn’t disclosed the scale of its AI business, though CEO Satya Nadella said in October that revenue from its Azure Machine Learning service had doubled for four consecutive quarters.

If nothing else, the work with OpenAI has given Nadella bragging rights. Here’s what he said at Microsoft’s annual shareholder meeting in December, a month after ChatGPT was launched:

“When I think about Azure, one of the things that we have done, in fact, in the context of even ChatGPT, which today is one of the more popular AI applications out there, guess what? It’s all trained on the Azure supercomputer.”

In February, Microsoft held a press event at its headquarters in Redmond, Washington, to announce new AI-powered updates to its Bing search engine and Edge browser. Altman was one of the featured speakers.

It’s been a bumpy ride since then, as the Bing chatbot has held some highly publicized and creepy conversations with users, and it also served up some incorrect answers at the launch. Somewhat fortunately for Microsoft, Google’s rollout of its rival Bard AI service was underwhelming, leading employees to describe it as “rushed” and “botched.”

Despite the early hiccups, the enthusiasm for new technologies based on large language models, or LLMs, is palpable across the tech industry.

At the core of OpenAI’s bot is an LLM called GPT-4 that’s learned to compose natural-sounding text after being trained on extensive online information sources. Microsoft has an exclusive license on GPT-4 and all other OpenAI models, the OpenAI spokesperson said.

There are plenty other LLMs available.

Last month, Google said it had given some developers early access to an LLM called PaLM.

Startups AI21 Labs, Aleph Alpha and Cohere offer their own LLMs, as does Google-backed Anthropic, which has picked Google as its “preferred” cloud provider. Like Altman and Musk, Anthropic cofounder Dario Amodei, who was previously vice president of research at OpenAI, has expressed concerns about the unbridled power of AI.

In 2021, Anthropic registered in Delaware as a public-benefit corporation, signifying an intention to have a positive impact on society even as it pursues profits.

“We were and are focused on developing innovative structures to provide incentives for safe development and deployment of AI systems and will have more to share on this in the future,” an Anthropic spokesperson told CNBC in an email.

Across the industry, one thing is clear: it’s early days.

Quinn Slack, CEO of code-search startup Sourcegraph, said he hasn’t seen proof that the OpenAI partnership has given Microsoft a notable advantage, even though he called OpenAI the top LLM provider.

“I don’t think people should look at Microsoft and say they’ve totally locked up OpenAI and OpenAI is doing their bidding,” Slack said. “I truly believe people there are motivated to build amazing technology and make it as widely used as possible. They view Microsoft as a great customer but not someone that’s controlling. That’s good, and I hope it stays that way.”

OpenAI has plenty of skeptics. Late last month the nonprofit Center for Artificial Intelligence and Digital Policy called on the Federal Trade Commission to stop OpenAI from releasing new commercial releases of GPT-4, describing the technology as “biased, deceptive, and a risk to privacy and public safety.”

When considering potential exits for OpenAI, Microsoft — which does not hold an OpenAI board seat — would be the natural acquirer given its close entanglement. But that sort of deal would likely attract regulatory scrutiny, because of concerns about AI and about Microsoft stifling competition. By remaining an investor and not becoming OpenAI’s owner, Microsoft could avoid Hart-Scott-Rodino reviews from U.S. competition regulators.

“I’ve gone through it. It’s painful,” said David Zilberman, a partner at Norwest Venture Partners.

Based on its existing valuation, the more probable path for OpenAI is an eventual IPO, said Scott Raney, a managing director at Redpoint Ventures.

According to PitchBook data, OpenAI is on pace to generate $200 million in revenue this year, up 150% from 2022, and then $1 billion in 2024, which would imply 400% growth.

“When you raise at a $30 billion valuation, it’s kind of like, there’s no turning back at that point,” Raney said. You’re saying, “Our plan is to be a big independent standalone company.”

OpenAI’s spokesperson said there are no plans to go public or get acquired.

WATCH: Why ChatGPT is a game changer for AI

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Meta removes Facebook page allegedly used to target ICE agents after pressure from DOJ

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Meta removes Facebook page allegedly used to target ICE agents after pressure from DOJ

U.S. Attorney General Pam Bondi speaks during a roundtable on “Antifa,” an anti-fascist movement he designated a domestic “terrorist organization” via executive order on September 22, at the White House in Washington, D.C., Oct. 8, 2025.

Evelyn Hockstein | Reuters

Meta removed a Facebook group page on Tuesday that was allegedly used to “dox and target” U.S. Immigration and Customs Enforcement agents in Chicago after being contacted by the Department of Justice.

Attorney General Pam Bondi revealed the Facebook takedown in an X post, and said that the DOJ “will continue engaging tech companies to eliminate platforms where radicals can incite imminent violence against federal law enforcement.”

A Meta spokesperson confirmed that the tech giant removed the Facebook group page, but declined to comment about its size and the specific details that warranted its removal.

“This Group was removed for violating our policies against coordinated harm,” the Meta spokesperson said in a statement that also referred to the company’s policies pertaining to “Coordinating Harm and Promoting Crime.”

Meta’s removal of the Facebook group page follows similar moves from rivals like Apple and Google, which have recently removed apps that could be used to anonymously report sightings of ICE agents and other law enforcement.

Read more CNBC tech news

Apple took down the ICEBlock app nearly two weeks ago following pressure from Bondi, who said at the time that the app was “designed to put ICE agents at risk just for doing their jobs.”

Apple said at the time in a statement that it removed the ICEBlock app based on information provided by law enforcement about alleged “safety risks.”

Google, which did not maintain the ICEBlock app on its app store, said in October that while the DOJ never contacted the search giant, the company removed “similar apps for violations of our policies.”

ICEBlock creator Joshua Aaron criticized both Apple and the White House in an interview with CNBC, and compared his app to others like Waze, which let drivers report when they see law enforcement officers in order to avoid getting ticketed for speeding.

“This is about our fundamental constitutional rights in this country being stripped away by this administration, and the powers that be who are capitulating to their requests,” Aaron said.

WATCH: Roth Capital Partners’ Rohit Kularni on OpenAI’s Sora.

Roth Capital Partners' Rohit Kularni: Here's what OpenAI's Sora means for social media platforms

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OpenAI forms expert council to bolster safety measures after FTC inquiry

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OpenAI forms expert council to bolster safety measures after FTC inquiry

OpenAI’s EMEA startups head Laura Modiano spoke at the Sifted Summit on Wednesday, 8 October.

Nurphoto | Nurphoto | Getty Images

OpenAI on Tuesday announced a council of eight experts who will advise the company and provide insight into how artificial intelligence could affect users’ mental health, emotions and motivation. 

The group, which is called the Expert Council on Well-Being and AI, will initially guide OpenAI’s work on its chatbot ChatGPT and its short-form video app Sora, the company said. Through check-ins and recurring meetings, OpenAI said the council will help it define what healthy AI interactions look like.

OpenAI has been expanding its safety controls in recent months as the company has faced mounting scrutiny over how it protects users, particularly minors.

In September, the Federal Trade Commission launched an inquiry into several tech companies, including OpenAI, over how chatbots like ChatGPT could negatively affect children and teenagers. OpenAI is also embroiled in a wrongful death lawsuit from a family who blames ChatGPT for their teenage son’s death by suicide.

Read more CNBC tech news

The company is building an age prediction system that will automatically apply teen-appropriate settings for users under 18, and it launched a series of parental controls late last month. Parents can now get notified if their child is showing signs of acute distress, for instance.

OpenAI said it began informally consulting with members of its new expert council as it was building its parental controls. The company brought on additional experts in psychiatry. psychology and human-computer interaction as it formalized the council, which officially launched with an in-person session last week.

In addition to its expert council, OpenAI said it is also working with researchers and mental health clinicians within the Global Physician Network who will help test ChatGPT and establish company policies. 

Here are the members of OpenAI’s Expert Council on Well-Being and AI:

  • Andrew Przybylski, a professor of human behavior and technology at the University of Oxford. 
  • David Bickham, a research scientist in the Digital Wellness Lab at Boston Children’s Hospital. 
  • David Mohr, the director of Northwestern University’s Center for Behavioral Intervention Technologies.
  • Mathilde Cerioli, the chief scientist at Everyone.AI, a nonprofit that explores the risks and benefits of AI for children.
  • Munmun De Choudhury, a professor at Georgia Tech’s School of Interactive Computing. 
  • Dr. Robert Ross, a pediatrician by training and the former CEO of The California Endowment, a nonprofit that aims to expand access to affordable health care. 
  • Dr. Sara Johansen, a clinical assistant professor at Stanford University who founded its Digital Mental Health Clinic.
  • Tracy Dennis-Tiwary, a professor of psychology at Hunter College.

If you are having suicidal thoughts or are in distress, contact the Suicide & Crisis Lifeline at 988 for support and assistance from a trained counselor

WATCH: FTC launches inquiry into AI chatbots acting as companions

FTC launches inquiry into AI chatbots acting as companions

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Oracle Cloud to deploy 50,000 AMD AI chips, signaling new Nvidia competition

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Oracle Cloud to deploy 50,000 AMD AI chips, signaling new Nvidia competition

We're still early in the AI cycle, says Bernstein's Stacy Rasgon

Oracle Cloud Infrastructure on Tuesday announced it will deploy 50,000 Advanced Micro Devices graphics processors starting in the second half of 2026.

AMD shares climbed about 2%. Oracle shares sank 4% while Nvidia was more than 3% lower.

The move is the latest sign that cloud companies are increasingly offering AMD’s graphics processing units as an alternative to Nvidia’s market-leading GPUs for artificial intelligence.

“We feel like customers are going to take up AMD very, very well — especially in the inferencing space,” said Karan Batta, senior vice president of Oracle Cloud Infrastructure.

Oracle will use AMD’s Instinct MI450 chips, which were announced earlier this year.

They are AMD’s first AI chips that can be assembled into a larger rack-sized system that enables 72 of the chips to work as one, which is needed to create and deploy the most advanced AI algorithms.

OpenAI CEO Sam Altman appeared with AMD CEO Lisa Su at a company event in June to announce the product.

Read more CNBC tech news

Earlier this month, OpenAI announced a deal with AMD for processors requiring 6 gigawatts of power over multiple years, with a 1-gigawatt rollout starting in 2026. As part of the deal, and if the deployment goes well, OpenAI may end up owning as many as 160 million shares of AMD, or about 10% of the company.

In September, OpenAI entered into a five-year cloud deal with Oracle that could be worth as much as $300 billion.

OpenAI has historically been closely linked with Nvidia, whose chips were used to develop ChatGPT. Nvidia’s chips dominate the market for data center GPUs with more than 90% market share. Nvidia also invested in OpenAI in September.

But OpenAI leaders say the company needs as much computing power as possible, which means it needs AI chips from multiple suppliers. OpenAI also has plans to design its own AI chips with Broadcom.

“I think AMD has done a really fantastic job, just like Nvidia, and I think both of them have their place,” Batta said.

Tuesday at Oracle AI World, founder and Chairman Larry Ellison is set to take the stage and share his views on the latest OpenAI deal and what his company is doing to stay ahead of its main cloud competitors – Microsoft, Amazon and Google

“Oracle has already shown it is willing to place big bets and go all in to meet the AI moment. The company must now prove that beyond capacity, it can capitalize on its massive underlying data and enterprise capabilities … to add meaningful value to the enterprise AI wave,” said Daniel Newman, CEO of The Futurum Group, on the sidelines of Oracle’s conference.

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