Here’s Why Microsoft Invested In OpenAI, Backed By Infosys, Elon Musk, Others

This week Microsoft announced that it is investing $1 Bn in partnership with OpenAI to support the development of an AI framework and models for AI applications across operations and services, built on the company’s Azure cloud service. OpenAI is a non-profit AI research group, backed by the likes of Elon Musk, Peter Thiel, Infosys, Amazon Web Services and others. However, Microsoft’s investment would be for a for-profit offshoot of OpenAI.

OpenAI will be using Microsoft’s Azure cloud services to run the group’s AI software. The two companies will come together to build a large-scale AI system for Azure. The goal of the investment is to develop artificial general intelligence (AGI), which is another term for an autonomous computer which is competent to learn new skills and solve tasks as humans do.

The companies are also hoping to solve some of the big problems in today’s world such as climate change, education and access to healthcare by developing these advanced technologies. As per the teams of the deal, OpenAI will “exclusively” run its computing efforts in the Microsoft cloud. The company has previously used its AI technology to demonstrate the ability to compete with professional video gamers, predict language, and generate coherent blocks of text from a single phrase.

But why is Microsoft backing OpenAI in such a huge way? The answer to that is in the cloud.

Why Microsoft Invested In OpenAI?

OpenAI is four years old company with no great revenue return. Microsoft’s interest in the venture is something the experts have been analysing. Forbes reports that Microsoft will be in this venture for the long run by establishing Azure’s position in the market.

The partnership will help Microsoft Azure catch up with competitors such as Amazon Web Services and Google Cloud. In addition, OpenAI will standardise all its AI applications on Azure, giving Microsoft an edge over its competitors, when it comes to applications on the open framework.

The deal will also allow Microsoft to develop tools and technologies for its biggest clients such as banks to provide customer services and prevent fraudulent activities, based on OpenAI models. Therefore, the deal holds a strong potential for Microsoft to gain revenue out of it. Microsoft took the same step by acquiring GitHub for $7.5 bn. The deal helped out by creating a strong open-source revenue and developer base in the long run.

Most likely, the development of OpenAI will also be accelerated thanks to the infusion of funds from Microsoft. For Microsoft, partnering with OpenAI means helping develop technology with a good roadmap and big backers, that could one day define the open standards around the use of artificial intelligence.

What’s In It For OpenAI? 

OpenAI is an organisation with backing from some of the biggest companies in the world as well as the cream of Silicon Valley investors. Launched in 2015, it also counts, LinkedIn co-founder Reid Hoffman, Y Combinator’s Jessica Livingstone, Indian IT giant Infosys and others among its backers. The goal is to build an alternative to the AI development being done privately by the likes of Google, Facebook and Microsoft too. However, Musk left the board last year over a disagreement.

Microsoft will be OpenAI’s preferred partner for commercial reasons. A partnership with Microsoft is a quick solution for the company’s funding deficit as well as increases its reach in terms of business partners. However, OpenAI was perceived as a counterbalance to the hugely-funded tech giants, who are trying to leap in the field of AI technology as well. So in a way, it’s joining the big tech companies with this deal. The deal had left the AI community a little disappointed, starting a trend on Twitter.

In a statement, OpenAI defended the deal stating that it will be the most important technological development with the potential to shape human trajectory. He also added that the AGI technology will not be limited to a section, but will benefit all of humanity.

However, advocacy groups and policymakers have also raised concerned about computers developing ‘human-like’ behaviours, and have called for regulation and transparency in the development of such technology. Both companies say they are taking the security and use of technology as a top priority.

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