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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Developing artificial intelligence that lives up to the hype will take trillions of dollars of investment. So for OpenAI chief Sam Altman, the fact that the leader of the field could not easily raise new money was a big problem. A restructuring deal agreed with key shareholder Microsoft on Tuesday makes OpenAI a little more like a normal company. But only a little.
The gist of this outlandishly complex reshuffle: Microsoft will swap its stake in an OpenAI subsidiary in which profit is capped, taking instead shares in a new vehicle with no such profit limits. That new vehicle, OpenAI Group, can then raise cash from anyone it wants —starting with Japan’s SoftBank, which had made a $30bn investment conditional on getting this transformation done.
Microsoft has been paid handsomely for playing ball. Where previously its investment returns were restricted to about $100bn, its new stake is worth $135bn, based on OpenAI’s latest valuation from private share sales. If the ChatGPT owner achieves human-beating “artificial general intelligence” — a leap that could be worth tens of trillions in market value — it will be worth far more, even though Microsoft’s roughly one-quarter stake will be diluted over time.
Microsoft has also extracted other sweeteners, including a longer licence on OpenAI technology, and a pledge by the ChatGPT parent to spend $250bn on the Windows maker’s computing platforms. This is a promise that the heavily lossmaking OpenAI might actually be able to fulfil now it can raise capital more freely.
Another winner from the new arrangement with Microsoft is Altman. As chief executive of OpenAI Group, and a director on the board that controls it, he retains unparalleled sway over the company’s fortunes. He’ll be more free to cherry pick which companies host his AI models, and develop new products and devices without Microsoft breathing down his neck.
In general, the new arrangement with Microsoft is aligned with Altman’s style: namely, sowing his financial oats among many suppliers and investors. He has already woven a cat’s cradle of financial relationships around Silicon Valley totalling about $1.5tn, looping in chipmakers Nvidia and AMD, software giant Oracle and data centre operator CoreWeave.
What’s still not clear is how other shareholders could fit into this AI love-in, especially if OpenAI Group goes public. OpenAI’s mission is to develop AGI in a way that benefits humanity, not to create shareholder value. This commits OpenAI to behave in peculiar — and hard to price — ways. For example: if another company looks like it will reach AGI first, OpenAI’s charter commands it to “stop competing” and help its rival out.
What’s more, future investors will have an odd relationship with Altman. Unlike most tech moguls, he has no plan to own shares in the company he runs. That potentially puts his interests at odds with his backers if chasing AGI undermines OpenAI’s ability to turn a profit, which it almost certainly will. They may still get rich thanks to Altman’s efforts; there’s no chance they’ll tie him down.