5 min read

Microsoft has invested $1 billion in OpenAI with the goal of building next-generation supercomputers and a platform within Microsoft Azure which will scale to AGI (Artificial General Intelligence). This is a multiyear partnership with Microsoft becoming OpenAI’s preferred partner for commercializing new AI technologies. Open AI will become a big Azure customer, porting its services to run on Microsoft Azure.

The $1 billion is a cash investment into OpenAI LP, which is Open AI’s for-profit corporate subsidiary. The investment will follow a standard capital commitment structure which means OpenAI can call for it, as they need it. But the company plans to spend it in less than five years.

Per the official press release, “The companies will focus on building a computational platform in Azure for training and running advanced AI models, including hardware technologies that build on Microsoft’s supercomputing technology. These will be implemented in a safe, secure and trustworthy way and is a critical reason the companies chose to partner together.” They intend to license some of their pre-AGI technologies, with Microsoft becoming their preferred partner.

“My goal in running OpenAI is to successfully create broadly beneficial A.G.I.,” Sam Altman, who co-founded Open AI with Elon Musk, said in a recent interview. “And this partnership is the most important milestone so far on that path.” Musk left the company in February 2019, to focus on Tesla and because he didn’t agree with some of what OpenAI team wanted to do.


What does this partnership mean for Microsoft and Open AI

OpenAI may benefit from this deal by keeping their innovations private which may help commercialization, raise more funds and get to AGI faster. For OpenAI this means the availability of resources for AGI, while potentially allowing founders and other investors with the opportunity to either double-down on OpenAI or reallocate resources to other initiatives However, this may also lead to them not disclosing progress, papers with details, and open source code as much as in the past.

As for Microsoft, this deal is another attempt in quietly taking over open source. First, with the acquisition of GitHub and the subsequent launch of GitHub Sponsors, and now with becoming OpenAI’s ‘preferred partner’ for commercialization.

Last year at an Investor conference, Nadella said, “AI is going to be one of the trends that is going to be the next big shift in technology. It’s going to be AI at the edge, AI in the cloud, AI as part of SaaS applications, AI as part of in fact even infrastructure. And to me, to be the leader in it, it’s not enough just to sort of have AI capability that we can exercise—you also need the ability to democratize it so that every business can truly benefit from it. That to me is our identity around AI.” Partnership with OpenAI seems to be a part of this plan.

This deal can also possibly help Azure catch up with Google and Amazon both in hardware scalability and Artificial Intelligence offerings. A hacker news user comments, “OpenAI will adopt and make Azure their preferred platform. And Microsoft and Azure will jointly “develop new Azure AI supercomputing technologies”, which I assume is advancing their FGPA-based deep learning offering. Google has a lead with TensorFlow + TPUs and this is a move to “buy their way in”, which is a very Microsoft thing to do.”

It is also likely that Microsoft is investing money which will eventually be pumped back into its own company, as OpenAI buys computing power from the tech giant. Under the terms of the contract, Microsoft will eventually become the sole cloud computing provider for OpenAI, and most of that $1 billion will be spent on computing power, Altman says.

OpenAI, who were previously into building ethical AI will now pivot to build cutting edge AI and move towards AGI. Sometimes even neglecting ethical ramifications, wanting to deploy tech at the earliest which is what Microsoft would be interested in monetizing.

I see two primary motivations:

  • For OpenAI—to secure funding and to gain some control over hardware which in turn helps differentiate software.
  • For MSFT—to elevate Azure in the minds of developers for AI training.

– James Wang, Analyst at ARKInvest

However, the news of this investment did not go down well with some experts in the field who saw this as a pure commercial deal and questioned whether OpenAI’s switch to for-profit research undermines its claims to be “democratizing” AI.

“I can’t really parse its conversion into an LP—and Microsoft’s huge investment—as anything but a victory for capital” – Robin Sloan, Author

“What is OpenAI? I don’t know anymore.” – Stephen Merity, Deep learning researcher

People are also speculating whether creating AGI is really even possible. In a recent survey experts estimated that there was a 50 percent chance of creating AGI by the year 2099. Pet New York Times, most experts believe A.G.I. will not arrive for decades or even centuries. Even Altman admits OpenAI may never get there. But the race is on nonetheless. Then why is Microsoft delivering the $1 billion over five years considering that is neither enough money nor enough time to produce AGI.

Although, OpenAI has certainly impressed the tech community with its AI innovations. In April, OpenAI’s new algorithm that is trained to play the complex strategy game, Dota 2, beat the world champion e-sports team OG at an event in San Francisco, winning the first two matches of the ‘best-of-three’ series. The competition included a human team of five professional Dota 2 players and AI team of five OpenAI bots. In February, they released a new AI model GPT-2, capable of generating coherent paragraphs of text without needing any task-specific training. However experts felt that the move signalled towards ‘closed AI’ and propagated the ‘fear of AI’ for its ability to write convincing fake news from just a few words.

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