Microsoft and OpenAI are currently negotiating the future of their partnership. According to several US media reports, OpenAI is demanding more financial support and computing power from Microsoft. However, the technology company is reluctant to invest billions more. OpenAI expects to lose $5 billion this year and is looking for ways to cover its high operating costs.
Tensions between the two companies are rising. Microsoft is building its own AI capabilities and recently hired employees from OpenAI competitor Inflection. OpenAI is trying to renegotiate its exclusive contract with Microsoft and has signed a deal with Oracle for computing power. The startup has also brought other investors on board, including Nvidia and MGX.
Both companies have hired investment banks to negotiate Microsoft’s future involvement in OpenAI. At issue is how to convert Microsoft’s nearly $14 billion investment into equity if OpenAI becomes a for-profit company. The negotiations are considered complex because such a conversion on this scale is unusual and could potentially raise regulatory issues.
Sources: New York Times, Wall Street Journal