The news: Microsoft reportedly plans to invest $10 billion in OpenAI, the creator of the popular ChatGPT generative AI. Its patronage ensures first dibs on the latest AI innovations it can use to boost its own products, per CNBC.

A win-win for Microsoft and OpenAI: The deal is part of a funding round with other investors resulting in OpenAI’s value hitting $29 billion.

• Microsoft will reportedly get a 75% share of OpenAI’s profits until it makes back the money on its investment, after which the company would assume a 49% stake in OpenAI.
• The investment is in line with Microsoft’s interest in AI. “If you say mobile and cloud was the last paradigm, the next really is going to be AI,” CEO Satya Nadella said. “That's going to happen, I would say, in the next two, three years.”
• Investing in the startup isolates Microsoft from potential antitrust scrutiny while ensuring that it can benefit from OpenAI’s innovation.
• Upcoming versions of ChatGPT could help Microsoft’s Bing be a stronger competitor to Google Search.
• OpenAI can also gain mass adoption through its integration with Microsoft’s Office apps and even on Windows.

AI’s golden age? Microsoft may be leading the charge in AI investments and clearly sees very tangible applications for OpenAI’s technology, but more tech companies could soon stake their claims on AI solutions.

• While the tech industry is currently in a state of contraction with mass layoffs and decelerating investment on innovation and moonshot projects, investing in AI startups now makes good sense.
• Interest in generative AI solutions has just started to peak as the technology is now being productized. This means Big Tech can back existing AI players with investments in return for equity and access to technology.

An opportunity to improve AI ethics: OpenAI could benefit from Microsoft’s involvement, especially in the area of AI ethics. Microsoft has distinguished itself in the field of ethical AI, and its guiding principles could help ensure ChatGPT is isolated from potential misuse.

What’s next? Companies like Microsoft see the productization of AI as the future and will spare no expense in securing access to the technology. This could lead to an AI turf war among Big Tech companies.

his article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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