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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 re

by 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.
        p1esk 3y ago
        GPT-4 is an existential threat to Google. Since March 24 of this year, 80% of the time I ask GPT-4 questions I would google before. And Google knows this. They are throwing billions at it but simply cannot catch up.
        smoldesu 3y ago
        Beating OpenAI in a money-pissing competition is not their priority. I don't use Google or harbor much love for them, but the existence of AI does not detract from the value of advertising. If anything, it funnels more people into it as they're looking to monetize that which is unprofitable. ChatGPT is not YouTube; it doesn't print money. Feel however you will about it, but people have been rattling this pan for decades now. Google's bottom line will exist until someone finds a better way to extract marginal revenue than advertising.
        p1esk 3y ago
        Beating OpenAI in a money-pissing competition is not their priority I bet Google has already spent an order of magnitude more money on GPT-4 rival development than OpenAI spent on GPT-4.
    - PostOnce 3y ago
      I personally believe these are marketing failures rather than technical failures. I also personally loathe Microsoft, but even I will concede that they probably have the technical wherewithal to follow known trajectories, the cat is out of the bag with AI now.
  - p1esk 3y ago
    The larger the corporation the harder for it to keep up or innovate.
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.

by rvnx 3y ago

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.
        p1esk 3y ago
        GPT-4 is an existential threat to Google. Since March 24 of this year, 80% of the time I ask GPT-4 questions I would google before. And Google knows this. They are throwing billions at it but simply cannot catch up.
        smoldesu 3y ago
        Beating OpenAI in a money-pissing competition is not their priority. I don't use Google or harbor much love for them, but the existence of AI does not detract from the value of advertising. If anything, it funnels more people into it as they're looking to monetize that which is unprofitable. ChatGPT is not YouTube; it doesn't print money. Feel however you will about it, but people have been rattling this pan for decades now. Google's bottom line will exist until someone finds a better way to extract marginal revenue than advertising.
        p1esk 3y ago
        Beating OpenAI in a money-pissing competition is not their priority I bet Google has already spent an order of magnitude more money on GPT-4 rival development than OpenAI spent on GPT-4.
  - PostOnce 3y ago
    I personally believe these are marketing failures rather than technical failures. I also personally loathe Microsoft, but even I will concede that they probably have the technical wherewithal to follow known trajectories, the cat is out of the bag with AI now.
- p1esk 3y ago
  The larger the corporation the harder for it to keep up or innovate.

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.