Microsoft’s Investment in OpenAI Puts Pressure on Google to Respond

The investment was expected as ChatGPT drew immediate worldwide attention. Observers now look to Google to see how the dominant search vendor will respond to ChatGPT’s popularity. After months of anticipation, Microsoft confirmed on Monday that it plans a multibillion dollar, multi-year investment in ChatGPT and Dall-E 2 maker OpenAI — putting pressure on archrival and dominant search vendor Google to respond.

Microsoft initially partnered with the research company in 2019 when it invested $1 billion. It later gained exclusive rights to the OpenAI large language model GPT-3 in 2021. The New York Times reported the new investment from Microsoft, revealed a few days after the tech giant laid off 10,000 employees, will be $10 billion.

Microsoft said with the partnership it will step up development and deployment of specialized supercomputing systems to accelerate OpenAI‘s independent AI research and development. The vendor also plans to deploy new OpenAI models across its consumer and enterprise products, including Azure OpenAI Services. Finally, Microsoft plans to power all OpenAI workloads across research, products and API services.

Since OpenAI introduced it in November, ChatGPT, a large conversational language model capable of writing academic essays and computer code and answering limitless queries with seemingly well-informed answers, the system’s popularity around the world has rocketed, even amid concerns about its accuracy and potential to foster plagiarism.

Microsoft commits to AI

Despite reports from the New York Times and other media outlets citing the $10 billion number, a spokesperson for the tech giant responded to TechTarget’s request for comment by saying that “specifics of the financial and deal terms are not being disclosed and we aren’t sharing any more details about this extended partnership beyond what’s in the blogs.”

But the splashy development reverberated across a tech industry that has been battered by widespread layoffs in recent months and bolstered Microsoft’s message that it’s committed to AI. “Microsoft wants everyone to know that they are heavily into cutting edge AI,” said Nemertes CEO and analyst Johna Till Johnson.

Moreover, Microsoft’s investment in OpenAI also enables the tech giant to take its time in developing AI capabilities and not have to deal as much with the pressure of making products and services profitable quickly, said Forrester analyst Will McKeon White. So instead of trying to figure what areas of AI need the most development or are most profitable, Microsoft will let OpenAI do much of that, he said.

“Having a neutral third-party organization where this is being run through, it makes sense to continue funding that,” McKeon-White said.

Waiting on Google

With Microsoft’s big investment in OpenAI, many are wondering how Google will respond to it and the popularity of ChatGPT itself. Google is now strategizing ways to outdo ChatGPT, which may be threatening the Google’s conception of search. Google Search relies more on search engine optimization and ranking media and research reports on topics.

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