What if Microsoft let OpenAI go free?
Subscribe to enjoy similar stories. Call it a modern-day version of a spectacular Renaissance patronage. Since 2019 Microsoft has provided more than $13bn in cash and computing capacity to OpenAI , a once-penniless startup that is now at the forefront of generative artificial intelligence (AI) and, as of its most recent fundraising round, worth $157bn.
In exchange, Microsoft has gained the exclusive right to run OpenAI’s models on Azure, its cloud-computing business. So far it has been a wildly successful partnership. Funding from Microsoft has helped OpenAI build bigger and better large language models (LLMs).
That technology, in turn, has been incorporated into Microsoft’s various software products. The ties between the two have allowed Azure to chip away at the lead of AWS, Amazon’s cloud-computing division, notes Brent Thill of Jefferies, an investment bank (see chart). Analysts on average reckon Azure’s revenue grew by 30%, year on year, in the quarter from July to September, compared with 19% for AWS; the rivals both report their results this week.
Eric Boyd, head of Microsoft’s AI platform, says the “incredibly fruitful" partnership with OpenAI has helped lure 60,000 customers to Azure AI. Yet like Michelangelo with the Medicis, OpenAI sometimes chafes at the ties to its wealthy benefactor. Some of its board members and other investors have told The Economist they believe that Microsoft should loosen its grip.
In particular, they have their eyes on the half of the cloud-computing market still controlled by AWS. Gaining access to that would increase OpenAI’s already dominant position in the provision of LLms, lifting revenues that are already expected to be upwards of $3.5bn this year. Microsoft declines to discuss
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