5 ms·

I guess it has a cost, though? I presume OpenAI didn’t like this move. If that’s the case, what might be the consequences?

consumer451 3y ago
Just to play this out, what possible moves would OpenAI make at this point that they wouldn't have until this happened? Altman is out there trying to raise ridiculous sums to get away from Azure, didn't he make the first move here?
- bhouston 3y ago
  I think the main move would be some type of true AGI that leads to a hard takeoff scenario, but it isn't clear we are close to that or not. Basically something that is more than just another bump in the scorecard for GPT 5 over GPT 4. Otherwise it is still just a horse race between relatively interchangeable GPT engines.
kibwen 3y ago
There are no consequences for Microsoft. It owns a 49% stake in OpenAI, so the only action that OpenAI could take to hurt Microsoft would be to deliberately destroy its own value.
deleted 3y ago
[deleted]
bhouston 3y ago
> I guess it has a cost, though? I presume OpenAI didn’t like this move. If that’s the case, what might be the consequences? Until OpenAI releases GPT 5 and it blows everyone away, OpenAI's leverage is constantly decreasing as the gap between their best model and everyone else's best model decreases. There doesn't seem to be moats right now in this industry except for pure model performance. Maybe someone should as ChatGPT what OpenAI should do to maintain long-term leadership in this industry?
- asynchronous 3y ago
  They also have brand recognition, for what it’s worth. Every non-engineer in the world practically thinks AI == ChatGPT.
  - deleted 3y ago
    [deleted]
  - ethanbond 3y ago
    Meh, I don't think it's worth much. In a few years that'll be like claiming that so-and-so had name brand recognition for transistors. Most people don't need to care who manufactures their transistors.
    - donny2018 3y ago
      It’s not necessarily a bad thing. Most people don’t know that TSMC exists, or what Microsoft does beyond Windows and Xbox (which are a small fraction of its business).
      - ethanbond 3y ago
        Correct, I didn't say it's a bad thing. I said it's not clear that it's a good thing (i.e. an asset)
    - bhouston 3y ago
      Unless your market is direct to end user, end user brand name recognition doesn't matter. In the case of AI, at least so far, the primarily income won't be from end-users directly, but rather via enterprise integrations into existing tools that already have end user market share (e.g. Microsoft Office, Microsoft Windows, VS Code, Notion, etc.)
    - CamperBob2 3y ago
      Most people don't need to care who manufactures their transistors. They might, in an upside-down world where the Shockley Semiconductor board tried to fire Shockley, and where the Traitorous Eight not only didn't bail out but took his side.
iambateman 3y ago
I suppose they didn't but Microsoft has a $3T market cap and OpenAI is theoretically valued at $80B. OpenAI has 700 people, Microsoft has 220,000 people. OpenAI is strong but they're still dependent on MSFT.
- cuckatoo 3y ago
  MSFT needs companies like OpenAI to give Azure credits to for their valuation to continue soaring. The deferred revenue on their balance sheet from the unspent Azure credits they give as investment are worth much more to their market cap than $80B.
  - jart 3y ago
    It sounds like they took the Federal Reserve's business model and applied it to computing.
yellow_postit 3y ago
OpenAI will want to expand to all clouds to increase TAM. Microsoft will want to avoid things regulators in the current regime will go after. This seems like a step towards both and ultimately good for developers as it seems likely to bring costs down by increasing competition.
karmasimida 3y ago
They are under an exclusive contract with MSFT, they can't do anything.

consumer451 3y ago

Just to play this out, what possible moves would OpenAI make at this point that they wouldn't have until this happened? Altman is out there trying to raise ridiculous sums to get away from Azure, didn't he make the first move here?

bhouston 3y ago
I think the main move would be some type of true AGI that leads to a hard takeoff scenario, but it isn't clear we are close to that or not. Basically something that is more than just another bump in the scorecard for GPT 5 over GPT 4. Otherwise it is still just a horse race between relatively interchangeable GPT engines.

kibwen 3y ago

There are no consequences for Microsoft. It owns a 49% stake in OpenAI, so the only action that OpenAI could take to hurt Microsoft would be to deliberately destroy its own value.

deleted 3y ago

[deleted]

bhouston 3y ago

> I guess it has a cost, though? I presume OpenAI didn’t like this move. If that’s the case, what might be the consequences? Until OpenAI releases GPT 5 and it blows everyone away, OpenAI's leverage is constantly decreasing as the gap between their best model and everyone else's best model decreases. There doesn't seem to be moats right now in this industry except for pure model performance. Maybe someone should as ChatGPT what OpenAI should do to maintain long-term leadership in this industry?

asynchronous 3y ago
They also have brand recognition, for what it’s worth. Every non-engineer in the world practically thinks AI == ChatGPT.
- deleted 3y ago
  [deleted]
- ethanbond 3y ago
  Meh, I don't think it's worth much. In a few years that'll be like claiming that so-and-so had name brand recognition for transistors. Most people don't need to care who manufactures their transistors.
  - donny2018 3y ago
    It’s not necessarily a bad thing. Most people don’t know that TSMC exists, or what Microsoft does beyond Windows and Xbox (which are a small fraction of its business).
    - ethanbond 3y ago
      Correct, I didn't say it's a bad thing. I said it's not clear that it's a good thing (i.e. an asset)
  - bhouston 3y ago
    Unless your market is direct to end user, end user brand name recognition doesn't matter. In the case of AI, at least so far, the primarily income won't be from end-users directly, but rather via enterprise integrations into existing tools that already have end user market share (e.g. Microsoft Office, Microsoft Windows, VS Code, Notion, etc.)
  - CamperBob2 3y ago
    Most people don't need to care who manufactures their transistors. They might, in an upside-down world where the Shockley Semiconductor board tried to fire Shockley, and where the Traitorous Eight not only didn't bail out but took his side.

iambateman 3y ago

I suppose they didn't but Microsoft has a $3T market cap and OpenAI is theoretically valued at $80B. OpenAI has 700 people, Microsoft has 220,000 people. OpenAI is strong but they're still dependent on MSFT.

cuckatoo 3y ago
MSFT needs companies like OpenAI to give Azure credits to for their valuation to continue soaring. The deferred revenue on their balance sheet from the unspent Azure credits they give as investment are worth much more to their market cap than $80B.
- jart 3y ago
  It sounds like they took the Federal Reserve's business model and applied it to computing.

yellow_postit 3y ago

OpenAI will want to expand to all clouds to increase TAM. Microsoft will want to avoid things regulators in the current regime will go after. This seems like a step towards both and ultimately good for developers as it seems likely to bring costs down by increasing competition.

karmasimida 3y ago

They are under an exclusive contract with MSFT, they can't do anything.