Can OpenAI ever break free from Microsoft?
When Microsoft invested USD $10 billion in OpenAI five years ago, at the outset of the Generative AI boom, this gave them huge bragging rights for the technology that was behind ChatGPT the moment it became an overnight hit. This also propelled them to the forefront of the AI field, creating such a stir that even the once-dominant Google found itself grappling with botched AI releases.
In early 2023, when the not-so-long-ago AI pack leader (Google) botched its untested GenAI product (Bard) in response to this seemingly existential threat, it clearly gave both OpenAI and Microsoft the upper hand. A large part of the media was, in fact, wondering whether Google had completely lost the AI story.
OpenAI has made significant progress since ChatGPT, progressing from GPT 3.5 to GPT 4, and now introducing its new text-to-video model, SORA, which is soon to be widely available, all while hinting at Artificial General Intelligence(AGI).
OpenAI has clearly been one of Microsoft’s best investments to date.
Microsoft’s Golden Goose
With OpenAI safely in their bag, Microsoft built a slew of generative AI services around OpenAI, termed Azure OpenAI services. These services provide Microsoft’s enterprise clients access to OpenAI’s world-class GenAI model, albeit with the cover of Microsoft’s security and governance.
Microsoft then played a masterstroke. It merged two worlds together. They leveraged their partnership with OpenAI and their acquisition of Github to develop the groundbreaking tool, GitHub Co-pilot, which has simultaneously upended and empowered technical professionals. This tool gave them a huge leg up in the developer ecosystem. At this point in time, they’re sitting pretty well with the other AI leaders in the group.
With Github CoPilot, Microsoft has an AI tool that empowers developers around the world, while ChatGPT empowers everyday people like you and me.
This is ingenious given the fact that just 5 years ago, they were not considered a serious AI play.
What about Sam?
Well, even the best things come with a price tag!!
Sam Altman (OpenAI CEO) recently met a ton of Fortune 500 companies in San Francisco, where he pitched OpenAI Enterprise services openly to them. (see below)
You may notice that Microsoft also offers the same services that OpenAI is attempting to provide here through its OpenAI Azure offerings (see the list below for comparison).
So should anyone really care? Don’t most tech companies do this anyway?
So many other cutting-edge technology companies out there, such as Redis and MongoDB, for instance, have various offerings on the cloud. Let’s take MongoDB, for example.
- MongoDB Atlas — it’s SAAS (software as a service) product that can be deployed on all three public clouds — Google, AWS, and Microsoft Azure.
- MongoDB Community — it’s free open-source version that can be downloaded and deployed on-premise or even on the cloud, subject to the licensing norms.
The deployment mechanism here is standard for all technology-product-driven firms that wish to deploy their services on the cloud.
However, OpenAI’s case is totally different!! Here’s why: -
- Since Azure is where OpenAI trained its models, it cannot deploy its models on any other infrastructure. Its reliance on Microsoft for infrastructure support is total, and the USD $10 billion in cloud credits are a nice carrot.
- OpenAI cannot deploy their models on any other firms, partners, or competitor infrastructure because we do not know what kind of agreement they have with Microsoft on this.
- OpenAI also cannot open source any of their models to the public, just like Meta did with Llama, even if they wanted to, again due to the reasons mentioned above.
To be fair, training generative AI models consumes a truckload of costs and resources, the kind that only large hyperscalers (such as cloud providers) have. Google’s Gemini model for instance is available only on its platform.
However other budding GenAI companies like Cohere have their own generative AI models, such as Mistral, available on both AWS Bedrock and Oracle OCI.
OpenAI is now tied by their hips to Azure in a deadly embrace of sorts.
Since the big boardroom shuffle last year, Satya Nadella has offered Sam Altman a position at Microsoft to lead their AI division, which he refused and has now gone to an equally big icon, Mustafa Suleyman.
Now back at the helm, OpenAI wishes to branch out.
Presently, at this point in time, OpenAI has a ton of services that are not on the Azure cloud yet; its latest sensation, SORA, is one of them. So clearly, there is some traction between when OpenAI makes a service generally available to the public (G.A.) and when Azure launches its own version of the same.
Can OpenAI even dream of an IPO now with Microsoft breathing down their necks and possibly even peeping into their research labs? With an independent board and one non-voting director from Microsoft on it, things may not be as easy as it seems.
OpenAI’s success stemmed from its partnership with Microsoft, but Microsoft now has the power to stifle this growth whenever they see fit. Of course, Mircosoft may never kill the golden goose, but they may just walk away with a whole bunch of their golden eggs for a song.
The Suleyman Angle
Bringing Mustafa Suleyman into Microsoft to head their consumer AI division, Microsoft AI, should send warning bells ringing across OpenAI’s halls. The former head of DeepMind, Suleyman himself, is no stranger to generative AI and already has a bestselling book, “The Coming Wave,” credited to his name.
Here are some questions worth considering:
- Is Microsoft eventually trying to wean off its dependence on OpenAI, given the drama that unfolded last year?
- Was OpenAI the gateway to the AI universe that Microsoft always wanted but never had? So, are they now ready to decouple?
- Does Microsoft believe that Sam Altman has amassed an excessive amount of power and influence in the industry and needs to be tamed?
Taming a giant like Sam Altman, who’s firm is still riding the GenAI wave and has loads of goodwill with the AI community, will not be an easy thing!
