OpenAI Finalizes Corporate Restructuring, Gives Microsoft 27% Stake and Technology Access Until 2032 (microsoft.com) 14
Microsoft and OpenAI have finalized a new agreement that removes uncertainty for investors and clears the path for OpenAI to restructure as a for-profit business. Microsoft receives a 27% ownership stake in OpenAI worth approximately $135 billion and retains access to the AI startup's technology until 2032, including models that achieve AGI. OpenAI completed its recapitalization, simplifying its corporate structure while keeping the nonprofit in control of the for-profit entity. The OpenAI Foundation receives an equity stake worth roughly $130 billion and plans to initially focus on funding work to accelerate health breakthroughs.
Microsoft backed OpenAI with $13.75 billion and was the biggest holdout among investors during negotiations. Once OpenAI achieves AGI, verified by an independent expert panel, Microsoft will no longer receive a cut of OpenAI's revenue. Microsoft also loses its right of first refusal on new cloud infrastructure business from OpenAI, though OpenAI commits an additional $250 billion to Azure.
Microsoft backed OpenAI with $13.75 billion and was the biggest holdout among investors during negotiations. Once OpenAI achieves AGI, verified by an independent expert panel, Microsoft will no longer receive a cut of OpenAI's revenue. Microsoft also loses its right of first refusal on new cloud infrastructure business from OpenAI, though OpenAI commits an additional $250 billion to Azure.
Okay but... (Score:3)
> Microsoft receives a 27% ownership stake in OpenAI worth approximately $135 billion and retains access to the AI startup's technology until 2032
Is that actual value of the hardware or speculative value of the brand?
As far as I know, there is still zero plan to actually make the trillions of dollars from AI that they will need to justify the trillion plus they've thrown at it so far. Like they need to make a lot of money just to break even, and so far the only plan seems to be "then a miracle occurs."
So I guess if Microsoft at least gets 27% of the physical hardware that's something tangible they can recover when the bubble pops.
=Smidge=
Re: (Score:3)
> Microsoft receives a 27% ownership stake in OpenAI worth approximately $135 billion and retains access to the AI startup's technology until 2032
Is that actual value of the hardware or speculative value of the brand?
As far as I know, there is still zero plan to actually make the trillions of dollars from AI that they will need to justify the trillion plus they've thrown at it so far. Like they need to make a lot of money just to break even, and so far the only plan seems to be "then a miracle occurs."
So I guess if Microsoft at least gets 27% of the physical hardware that's something tangible they can recover when the bubble pops. =Smidge=
If the bubble pops, that hardware won't be worth much as everyone will be offloading the same type of hardware at the same time.
That said, we now have not just companies, but also governments the world over propping up this bubble. All the big decision makers seem to have fallen into the AI cult mentality, where the AI is already god, or soon will be, and the only hope anyone has is to be on the AI team that spins up god, so that they can win the race to... uh, um, carry the three... uh, the irrelevance of
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> If the bubble pops, that hardware won't be worth much as everyone will be offloading the same type of hardware at the same time.
The hardware will be worth something in that it exists and can be re-deployed for literally any other computing task. They will not have to build a new data center for whatever bullshit waste of time they come up with next. Yes, the hardware will be basically worth scrap on the secondary market, but we're probably not talking about outright liquidation.
> All the big decisio
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The hardware will be worth something in that it exists and can be re-deployed for literally any other computing task.
It can't though, that's the problem. It's specifically configured for a specific task and not general use because that's how you get the most performance out of a piece of hardware.
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I mean, some are already openly discussing how humanity should be OK with being wiped out so that the universe can become what it's supposed to be, so long as AI is the reason we're wiped out. If that's not cult thinking, I don't know what it is.
It's like those Cthuluh (sp?) stories where you have cults that worship a destructive god that kills them instantly whenever it manifests. When you read it you think "why would they worship something like that ?!?" And now I'm not surprised anymore.
Re: Okay but... (Score:2)
People pursue power, it's baked in. Communism. The Church. Gubbermint. Now add the star trek ideas that seem just within our grasp if you burn the planet to the ground, that is too bad, that's merely the side effect of of a great economy.
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Re: Okay but... (Score:2)
What hardware? OpenAI rents all their hardware from companies like MS.
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The value of a company never has anything to do with the value of its physical assets. It's the price of a share, times the number of shares. That's it. When speculators bid up the price of a stock, the technical valuation of the company goes up. But is it actually more valuable? No.
If OpenAI were to go bankrupt, they might have to sell off assets. But all the creditors get paid first, and the owners of the stock get in line last for any proceeds of the sale of whatever assets can be sold.
Predeicting the bubble popping? (Score:2)
If Microsoft has access until 2032, does that mean the crash will happen in 2031? Or 2033?
Not Really OpenAI, Not LocalAI (Score:2)
Value stuck (Score:2)
So, this deal values OpenAI at $500B.
OpenAI was valued at around $500B sometime last year.
So, over the last year OpenAI's growth has essentially hit a dead end. Not a good sign for a company that is built on promises.
What industry will be wrought... (Score:2)
What industry will be wrought by the all the excess hardware left over from the LLM boom. At some point, everyone will give up on AGI and there will be a crash and we will have all these data centers filled with specialized hardware. Presumably, some industry will be able to take off when the hardware becomes dirt cheap.
For example, it could lead to advancements in gaming AI or DLSS or any number of things.