Microsoft to Deepen OpenAI Partnership, Invest Billions in ChatGPT Creator

The companies didn’t disclose the financial terms of the partnership.

OpenAI was in talks this month to sell existing shares in a tender offer that would value the company at around $29 billion, The Wall Street Journal reported, making it one of the most valuable U.S. startups on paper despite generating little revenue.

The investment shows the tremendous resources Microsoft is devoting toward incorporating artificial-intelligence software into its suite of products, ranging from its design app Microsoft Design to search app Bing. It also will help bankroll the computing power OpenAI needs to run its various products on Microsoft’s Azure cloud platform.

Microsoft plans to incorporate artificial-intelligence tools into all of its products and make them available as platforms for other businesses to build on, Chief Executive

Satya Nadella

said last week at a Wall Street Journal panel at the World Economic Forum’s annual event in Davos, Switzerland. Mr. Nadella said that his company would move quickly to commercialize tools from OpenAI, the research lab behind the ChatGPT chatbot as well as image generator Dall-E 2, which turns language prompts into novel images.

OpenAI, led by technology investor

Sam Altman,

began as a nonprofit in 2015 with $1 billion in pledges from

Tesla Inc.

CEO

Elon Musk,

LinkedIn co-founder

Reid Hoffman

and other backers. Its goal has long been to develop technology that can achieve what has been a holy grail for AI researchers: artificial general intelligence, where machines are able to learn and understand anything humans can.

OpenAI released a new suite of products this year that industry observers say represents a major step toward that goal and could pave the way for a host of new AI-driven consumer applications.

In the fall, it launched Dall-E 2, a project that allowed users to generate art from strings of text, and then made ChatGPT public on Nov. 30. ChatGPT has become something of a sensation among the tech community given its ability to deliver immediate answers to questions ranging from “Who was George Washington Carver?” to “Write a movie script of a taco fighting a hot dog on the beach.”

Alphabet Inc.’s

Google and Microsoft have each developed AI-generated image and text-language models—but have been slower to release them to the public in part due to ethical concerns.

In 2019, OpenAI created a for-profit arm and raised $1 billion from Microsoft, which was used in part to fund the intensive computing power required to train its artificial-intelligence algorithms. Under the arrangement, OpenAI agreed to use Azure as its exclusive cloud partner and said it would give priority to Microsoft when bringing new products to the market.

The decision garnered criticism from some in the artificial-intelligence community who said it represented a move away from OpenAI’s roots as a research lab that sought to benefit humanity over shareholders. OpenAI said it would cap profits at the company, diverting the remainder to the nonprofit group.

—Will Feuer contributed to this article.

Write to Berber Jin at [email protected] and Miles Kruppa at [email protected]