Microsoft was one of OpenAI's early investors, laying the foundation for the development and explosion of ChatGPT, which then fueled the AI ​​craze that continues to this day.

OpenAI quickly became the world's most influential and valuable AI startup.

Meanwhile, the Windows giant also rose to the world's leading position in AI thanks to these early investments. In total, Microsoft has poured more than $13 billion into prominent AI startups.

The company also uses ChatGPT as the basis for its Copilot suite of tools. Thanks to its stake in OpenAI, Microsoft generates billions of dollars in revenue.

During the development process, the two companies lobbied Congress together, developed strategies together, and seemed to agree on almost everything.

When OpenAI ousted Sam Altman from the CEO position last year, Microsoft CEO Satya Nadella worked behind the scenes to bring the founder back to the role.

The two companies are so close that Altman calls their relationship "the best brotherhood in tech."

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Is a Microsoft vs. OpenAI clash inevitable? Photo: FT

"A forest cannot have two tigers."

In March, it was reported that Altman and OpenAI CEO Brad Lightcap had publicly attempted to entice businesses away from Microsoft's Copilot and toward OpenAI's Enterprise ChatGPT.

Specifically, Altman and Lightcap "courted" over 300 corporate executives in New York, San Francisco, and London, belittling Microsoft by suggesting that businesses could work directly with people who had built genAI technology instead of taking legacy technology from Microsoft.

Meanwhile, Nadella once said, "If OpenAI were to disappear tomorrow… we have all the intellectual property and all the capabilities. We have the people, we have the computers, we have the data, we have everything."

Microsoft's $14 billion investment in OpenAI includes cash as well as computing resources, particularly the computing power needed to train and run the technology.

The most recent cash injection came in early October, when OpenAI raised $6.6 billion from investors including numerous banks, investment funds, Microsoft, and AI chip manufacturer Nvidia.

Microsoft reportedly invested $1 billion of that amount. After the funding round, OpenAI is estimated to be worth $157 billion.

But that's not enough for the company that owns ChatGPT. It's burning through cash at an incredible rate – $5 billion a year – and that's not going to stop anytime soon.

The New York Times reported that by 2029, the company will spend $37.5 billion annually on computing costs, not including salaries, rent, and all other company expenses.

Therefore, OpenAI wants Microsoft to provide it with even more computing power. And Microsoft is hesitating. The Times notes: "OpenAI employees complain that Microsoft isn't providing enough computing power. And if another company beats them in creating AI that matches the human brain, Microsoft will be held accountable, because they haven't provided OpenAI with the computing power they need."

OpenAI is now looking elsewhere for those resources. They have signed a nearly $10 billion deal with Oracle.

Additionally, Microsoft and OpenAI recently renegotiated the valuation of Microsoft's computing power, although it's unclear whether the new agreement will decrease or increase its financial value.

Because of these issues, Microsoft has taken precautions to avoid over-reliance on OpenAI for its future AI roadmap.

Notably, the company paid over $650 million to hire almost all of its staff from OpenAI's competitor, Inflection.

The software giant also hired Mustafa Suleyman, former CEO and co-founder of Inflection, to oversee Microsoft's AI efforts.

Suleyman and OpenAI have clashed several times, with Altman becoming increasingly resentful since Suleyman was hired.

Gil Luria, an analyst at investment bank DA Davidson, told the Times, "Microsoft could fall behind if it only uses OpenAI technologies. This is a real race, and OpenAI may not win."

(According to NYT, CW)

Microsoft publicly accuses Google of 'unfair play' . Microsoft's lawyers assert that Google is behind shady campaigns to discredit the Windows maker in Europe.