Microsoft and OpenAI have reached a non-binding agreement, facilitating OpenAI’s transition towards a for-profit structure ahead of a potential IPO. This deal is pivotal for OpenAI to secure $10 billion in investment from Softbank, contingent on expediting negotiations with Microsoft by year-end. Even though the announcement is positive, both companies are still finalizing the details, indicating that previous sticking points linger. OpenAI faces a monumental $300 billion deal for computing power from Oracle, necessitating substantial capital to support its ambitious plans. With Microsoft’s investments totaling $11 billion and securing a share of OpenAI’s profits, ongoing negotiations may involve transforming Microsoft’s profit-sharing into equity stakes. A key issue is safeguarding access to OpenAI’s model data, particularly with the prospect of developing Artificial General Intelligence (AGI). Regulatory approval will also be required for any final deal. OpenAI’s restructured model aims to ensure AI technologies benefit humanity at large.
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