Microsoft Corp. is in talks to invest $10 billion in ChatGPT owner OpenAI as part of a financing that would value the company at $29 billion, Semafor reported Monday, citing people familiar with the matter.
The news underscores growing interest in the artificial intelligence company, which has dazzled amateurs and industry experts alike with its chatbots capable of spitting out haiku, debugging code and answering questions while mimicking human speech.
The funding could also include other venture capital firms and a document sent to potential investors outlining its terms, with the goal of closing by the end of 2022, the report said.
The software giant invested $1 billion in 2019 in OpenAI, founded by Elon Musk and Sam Altman. Microsoft's cloud services division also provides the computing power needed by artificial intelligence companies.
Microsoft unveiled plans last year to integrate OpenAI's image-generating software into its search engine, Bing. A recent report from The Information claims that ChatGPT is making similar plans as Microsoft looks to compete with market leader Google Search.
According to Semafor, Microsoft will also receive 75 percent of OpenAI's profits until it recoups its initial investment. Once that threshold is reached, Microsoft will own 49 percent of OpenAI, other investors will get another 49 percent, and OpenAI's nonprofit parent company will get 2 percent, Semafor said.
Reuters reported last month that OpenAI recently pitched to investors that the group expects to generate $200 million in revenue next year and $1 billion by 2024.
OpenAI charges developers who license its technology about 1 cent or more to generate 20,000 words of text, and about 2 cents to create images from written prompts. Altman recently tweeted that his chatbot costs roughly a few cents of computing power every time someone uses it, raising concerns about OpenAI’s cash burn.
A Wall Street Journal report said last week that OpenAI was negotiating a tender offer to sell existing stock at a valuation of about $29 billion, which would attract at least $300 million in investment.
