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Microsoft and OpenAI Announce Expanded Partnership with Multi-Billion Dollar Investment

The News: This week, Microsoft and OpenAI announced the third phase of their long-term partnership: a multi-year, multi-billion-dollar investment that aims to speed the pace of AI breakthrough and spread those innovations around the world. OpenAI is the creator of ChatGPT, a chat-bot that can write music, code, and books, and independently passed the U.S. Medical Licensing Examination. This new partnership expands on two previous investments made in 2019 and 2021. Read the full announcement on Microsoft’s blog.

Microsoft and OpenAI Announce Expanded Partnership with Multi-Billion Dollar Investment

Analyst Take: The expanded partnership between Microsoft and OpenAI has been rumored for weeks so it’s not a complete surprise to see it come to fruition. This announcement also comes on the heels of another Microsoft announcement where the tech giant said it would expand access to OpenAI’s tools including the newly-popular ChatGPT. It’s clear that Microsoft is making AI advancement a priority for the future.

A Primer on the Microsoft and OpenAI Partnership

Microsoft and OpenAI first partnered in 2019, to build a general AI hardware and software platform within Azure. Since that initial investment, the companies have constructed multiple AI supercomputing systems at scale and have built new AI products like ChatGPT, GitHub Copilot, and DALL-E 2. These continued innovations have also helped spur Azure’s growth, which according to the latest earnings report released this week, accounts for a large portion of Microsoft’s recurring revenue.

Details of This New Investment

While we don’t know the dollar amount that Microsoft is pouring into OpenAI, it’s rumored to be around $10 billion. This is representative in Microsoft’s faith in OpenAI and their systems.

A few of the key goals for this partnership:

  • Supercomputing at scale: Microsoft is increasing its investment in developing and deploying specialized supercompute systems to speed up OpenAI’s own groundbreaking AI research. The goal is to keep building out Microsoft Azure’s AI infrastructure so customers can build and deploy their own AI apps globally.
  • AI-powered experiences: Microsoft plans to deploy OpenAI’s models throughout its consumer and business products, including new categories of digital experience that are built on OpenAI tech. Azure OpenAI Service will empower developers to build AI apps with direct access to OpenAI models backed by Azure’s respected infrastructure.
  • Exclusive cloud partnership: Microsoft will serve as OpenAI’s exclusive cloud provider, powered by Azure

Growth in AI and in the Tech Community as a Whole

What is more important than the specific goals or capabilities presented in the partnership, for me, is the greater move toward partnership in the tech community. We’re seeing an increased willingness for businesses to recognize their own strengths and limitations and understand the exponential gain in partnering with businesses that have the skills they don’t. Whether it’s an outright acquisition or an investment, it’s clear that AI at scale is a very real, very tangible goal for the tech industry right now. And the competition between big players like Microsoft and HPE will only serve the greater marketplace.

With platforms like ChatGPT garnering a lot of attention right now, it will be interesting to see how this investment plays out with tangible products or advancements to existing ones. It will also be interesting to see how this investment will help Microsoft’s financial growth as they continue to grab shares of the crowded cloud marketplace and take advantage of OpenAI technology to further power experiences across the company’s product/service portfolio. I am confident that this move will not only benefit Microsoft but the broader tech community as well shaping the AI driven future, which requires a balance of technology fortitude and ethical leadership.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.

Other insights from Futurum Research:

Microsoft Revenue Hits $52.7B for Q2 FY23, Up 2% YoY

Microsoft Set to Invest $10 billion in OpenAI — What That Could Mean for Enterprise Communications

NRF Impressions with Microsoft and More

Image Credit: OpenAI

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

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