Microsoft is reportedly undergoing high-level consultations with Openai on new contracts that will provide ongoing access to startup technology, even if Openai achieves what is defined as AGI or Advanced General Intelligence. If a transaction is made, key hurdles in Openai’s transition to becoming a fully commercial enterprise will be revealed.
Companies are negotiating regularly and may reach an agreement within weeks, Bloomberg reports, citing three anonymous sources. The report cited several sources, saying that the speech is positive, but other obstacles could emerge in the form of regulatory scrutiny and Elon Musk’s lawsuit to block the transition of open for-profits.
Openai is currently constituted as a mission-driven nonprofit organization that oversees capped commercial companies. The structure hasn’t stopped it from raising billions and operating like traditional high-tech companies, but Openai is still trying to shake off its constraints.
With a $13.75 billion investment and a right to a portion of the CHATGPT maker’s IP, Microsoft has been discussing for months, creating a meaningful obstacle to Openai’s future as a for-profit company.
Microsoft wants a larger stake in the restructuring company and is trying to ensure access to Openai’s technology beyond current trading, whenever it closes in 2030 or when Openai says it has achieved AGI, but no one can really agree on what it means.
Microsoft built Azure Openai services around a small business model, and integrated Startup technology into Copilot beyond Windows, Office, and Github. If Openai suddenly achieves AGI and blocks access, Microsoft loses its great strategic advantage. ChatGpt Maker is reportedly telling investors that they expect Microsoft to pay a lower share of revenue as it progresses.
Sources told Bloomberg that Openai hopes to ensure that Microsoft deploys Openai’s technology safely as Microsoft is approaching AGI.
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Microsoft also profited from Openai becoming a for-profit enterprise. As current setup cap investors are returned, a more standard structure allows Microsoft to have access to Openai’s technology as well as the opportunity to receive formal equity and significant returns.
Bloomberg reports that the two companies are negotiating Microsoft’s equity interests in a low to 30% range.
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