4 ms·

The most logical outcome would be for Microsoft to buy the for-profit OpenAI entity off its non-profit parent for $50B or some other exorbitant sum. They have

The most logical outcome would be for Microsoft to buy the for-profit OpenAI entity off its non-profit parent for $50B or some other exorbitant sum. They have the money, this would give the non-profit researchers enough play money that they can keep chasing AGI indefinitely, all the employees who joined the for-profit entity chasing a big exit could see their payday, and the new corporate parent could do what they want with the tech, including deeply integrate it within their systems without fear of competing usages. Extra points if Google were to sweep in and buy OpenAI. I think Sundar is probably too sleepy to manage it, but this would be a coup of epic proportions. They could replace their own lackluster GenAI efforts, lock out Microsoft and Bing from ChatGPT (or if contractually unable to, enshittify the product until nobody cares), and ensure their continued AI dominance. The time to do it is now, when the OpenAI board is down to 4 people, the current leader of whom has prior Google ties, and their interest is to play with AI as an academic curiosity, which a fat warchest would accomplish. Plus if the current board wants to slow down AI progress, one sure way to accomplish that would be to sell it to Google.

rvnx 3y ago
The new investors entered at a ~90B USD valuation for info. Microsoft I don't think they need it: Assuming they have the whole 90B USD to spend: it doesn't really make sense; they have full access to the source-code of OpenAI and datasets (because the whole training and runtime runs on their servers already). They could poach employees and make them better offers, and get away with a much more efficient cost-basis, + increase employee retention (whereas OpenAI employees may just become so rich after a buy-out that they could be tempted to leave). They can replicate the tech internally without any doubt and without OpenAI. Google is in deep trouble for now, perhaps they will recover with Gemini. In theory they could buy OpenAI but it seems out-of-character for them. They have strong internal political conflicts within Google, and technically it would be a nightmare to merge the infrastructure+code within their /google3 codebase and other Google-only dependencies soup.
- timeon 3y ago
  > They can replicate the tech internally without any doubt and without OpenAI. Would they be also able to keep up with development?
  - PostOnce 3y ago
    Would a 2.75 trillion dollar software company that has been around since the inception of the modern computer be able to keep up? Probably. If the people running it and the shareholders were committed to keeping up and spending money to do so.
    - ben_w 3y ago
      That wasn’t sufficient for Bing, Cortana, or Windows Mobile/Windows Phone.
      - smoldesu 3y ago
        It wasn't sufficient for Google+ or Farmville either, but both Google and Meta have extremely competitive LLMs. If Microsoft commit themselves (which is a big if), they could have a competitive AI research lab. They're a cloud company now though, so it makes sense that they'd align themselves with the most service-oriented business of the lot.
        p1esk 3y ago
        both Google and Meta have extremely competitive LLMs No they don’t. Both Bard and Llama are far behind GPT-4, and GPT-4 finished training in August 2022.
        smoldesu 3y ago
        GPT-4 is a magnitude larger and not a magnitude better. Even before that, GPT-3 was not a particularly high watermark (compared to T5 and BERT) and GPT-2 was famously so expensive to run that it ran up a 6-figure monthly cloud spend just for inferencing. Lord knows what GPT-4 costs at-scale, but I'm not convinced it's cost-competitive with the alternatives.
- nostrademons 3y ago
  The reason for a buy-out is to make this all legally "clean". Sure, Microsoft has physical access to the source code and model weights because it's trained on their servers. That doesn't mean they can just take it. If you've ever worked at a big cloud provider or enterprise software system, you'll know that there's a big legal firewall around customer data that is stored within the company's systems, and you can't look at it or touch it without the customer's consent, and even then only for specific business purposes. Same goes for the board. Legally, the non-profit board is in charge of the for-profit OpenAI entity, and Microsoft does not get a vote. If they want the board gone but the board does not want to step down, too bad. They have the option of poaching all the talent and trying to re-create the models - but they have to do this employee-by-employee, they can't take any confidential OpenAI data or code, etc. Microsoft may have OpenAI by the balls economically, but OpenAI has Microsoft by the balls legally. A buyout solves both of these problems. It's an exchange of economic value (which Microsoft has in spades) for legal control (which the OpenAI board currently has). Straightens out all the misaligned incentives and lets both parties get what they really want, which is the point of transactions in the first place.

rvnx 3y ago

The new investors entered at a ~90B USD valuation for info. Microsoft I don't think they need it: Assuming they have the whole 90B USD to spend: it doesn't really make sense; they have full access to the source-code of OpenAI and datasets (because the whole training and runtime runs on their servers already). They could poach employees and make them better offers, and get away with a much more efficient cost-basis, + increase employee retention (whereas OpenAI employees may just become so rich after a buy-out that they could be tempted to leave). They can replicate the tech internally without any doubt and without OpenAI. Google is in deep trouble for now, perhaps they will recover with Gemini. In theory they could buy OpenAI but it seems out-of-character for them. They have strong internal political conflicts within Google, and technically it would be a nightmare to merge the infrastructure+code within their /google3 codebase and other Google-only dependencies soup.

timeon 3y ago
> They can replicate the tech internally without any doubt and without OpenAI. Would they be also able to keep up with development?
- PostOnce 3y ago
  Would a 2.75 trillion dollar software company that has been around since the inception of the modern computer be able to keep up? Probably. If the people running it and the shareholders were committed to keeping up and spending money to do so.
  - ben_w 3y ago
    That wasn’t sufficient for Bing, Cortana, or Windows Mobile/Windows Phone.
    - smoldesu 3y ago
      It wasn't sufficient for Google+ or Farmville either, but both Google and Meta have extremely competitive LLMs. If Microsoft commit themselves (which is a big if), they could have a competitive AI research lab. They're a cloud company now though, so it makes sense that they'd align themselves with the most service-oriented business of the lot.
      - p1esk 3y ago
        both Google and Meta have extremely competitive LLMs No they don’t. Both Bard and Llama are far behind GPT-4, and GPT-4 finished training in August 2022.
        smoldesu 3y ago
        GPT-4 is a magnitude larger and not a magnitude better. Even before that, GPT-3 was not a particularly high watermark (compared to T5 and BERT) and GPT-2 was famously so expensive to run that it ran up a 6-figure monthly cloud spend just for inferencing. Lord knows what GPT-4 costs at-scale, but I'm not convinced it's cost-competitive with the alternatives.
nostrademons 3y ago
The reason for a buy-out is to make this all legally "clean". Sure, Microsoft has physical access to the source code and model weights because it's trained on their servers. That doesn't mean they can just take it. If you've ever worked at a big cloud provider or enterprise software system, you'll know that there's a big legal firewall around customer data that is stored within the company's systems, and you can't look at it or touch it without the customer's consent, and even then only for specific business purposes. Same goes for the board. Legally, the non-profit board is in charge of the for-profit OpenAI entity, and Microsoft does not get a vote. If they want the board gone but the board does not want to step down, too bad. They have the option of poaching all the talent and trying to re-create the models - but they have to do this employee-by-employee, they can't take any confidential OpenAI data or code, etc. Microsoft may have OpenAI by the balls economically, but OpenAI has Microsoft by the balls legally. A buyout solves both of these problems. It's an exchange of economic value (which Microsoft has in spades) for legal control (which the OpenAI board currently has). Straightens out all the misaligned incentives and lets both parties get what they really want, which is the point of transactions in the first place.