OpenAI, the creator of ChatGPT, is casting a spell on Microsoft

The hottest startup in Silicon Valley right now is OpenAI, developer of Microsoft-backed ChatGPT, a popular chatbot that can write a poem, a college essay, or even a line of program code.

Billionaire Tesla tycoon Elon Musk was an early investor in OpenAI and Microsoft is said to be in talks to increase the initial investment from $1 billion to $10 billion with the aim of challenging Google’s world-dominant search engine.

If agreed, the infusion of cash by the Windows maker would value OpenAI at a whopping $29 billion, making it a rare success in the tech world when big players like Amazon, Meta and Twitter are cutting costs and laying off staff.

“It’s clear Microsoft is going tough on this front and won’t be left behind on what could be a potentially game-changing AI investment,” said analyst Dan Ives of Wedbush Securities.

Before ChatGPT was released, OpenAI dazzled tech experts with Dall-E 2, a program that creates digital images with simple instructions.

Microsoft, making no secret of its AI ambitions, has integrated Dall-E 2 into many of its applications and now, according to a report in Bloomberg, the tech giant wants to graft ChatGPT into its Bing search engine to challenge Google.

Since ChatGPT was introduced in November, the ingenuity of this chat software has sparked the curiosity and fascination of netizens.

He is able to formulate detailed, human-like answers to a wide range of topics in a matter of seconds, raising concerns that he is vulnerable to abuse by cheaters at school or to being misled.

– ‘Not cheap’ –

AI specialist Rob Wilson, founder of software company OneReach.ai, said that this incredible success is due in part to OpenAI’s clever marketing strategy that has made its research accessible to non-experts.

“It was one thing to make this technology available to techies. Showing it in the chat UI and letting non-developers start playing with it ignited a conversation,” he said.

OpenAI was founded in late 2015 and is led by Sam Altman, a 37-year-old entrepreneur and former head of startup incubator Y Combinator.

The company has relied on financial support from high-profile shareholders since its inception, including LinkedIn co-founder Reid Hoffman, investor Peter Thiel, and Musk.

The billionaire served on the board of directors of OpenAI until 2018, but left to focus on Tesla, the electric car company.

The startup also relies on a team of computer scientists and researchers led by Ilya Sutskever, a former Google executive who specializes in machine learning.

OpenAI, which did not respond to AFP’s inquiries, had around 200 employees by 2021, according to an inquiry made directly on ChatGPT.

For now, despite the excitement created by ChatGPT, the company still has to find a path to financial independence.

Founded as a nonprofit, the startup went “limited for profit” in 2019 to attract more investors, and co-founder Greg Brockman said this week that a paid version of ChatGPT is in the works.

Seeking financing seems necessary for a company with huge expenses.

In a Twitter exchange with Musk in early December, Altman acknowledged that each ChatGPT conversation costs OpenAI several US cents.

Tom Goldstein, an assistant professor in the computer science department at the University of Maryland, estimates that the company is shelling out $100,000 a day for its bot, or about $3 million a month.

Goldstein said a partnership with Microsoft, which provides the startup with remote computing services, could cut costs, but “either way, it’s not cheap.”

“Some say it’s wasteful to pour those kinds of resources… into a demo,” he added.

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