OpenAI is already holding preliminary talks with a plan of raising a minimum of $10 billion, with Amazon possibly fronting the operation.
These negotiations can be about OpenAI leveraging in-house AI chips by Amazon, indicating a change in strategy for AI infrastructure.
Any agreement won’t affect the current collaboration between OpenAI and Microsoft, which holds exclusive publishing rights in the cloud.
OpenAI was established in 2015, focusing on developing artificial intelligence for societal good. The organization was formed with a non-profit business model, though it later adopted a hybrid business model, enabling it to raise capital from private sources while retaining its mission. This adaptation made it possible for OpenAI to secure significant investment from its strategic investors to commercialize its artificial intelligence.
One key to the success of OpenAI has been its collaboration with Microsoft, which has invested billions of dollars in the company through multiple funding rounds. The partnership between OpenAI and Microsoft enabled the latter to gain access to the necessary funding as well as the infrastructure needed to train more complex models through its cloud services, in exchange for the exclusive rights to its services through its cloud platform.
As the adoption of various OpenAI products grew across different sectors, especially those that deal with conversational and generative AI, there was a huge need for computational capabilities. Large AI models’ training and functioning need substantial computational abilities, and thus the cost of infrastructure makes this need key for OpenAI to focus on for achieving success. This further compelled OpenAI to search for different collaborations other than what was ongoing.
Amazon has been ramping up its overall AI capabilities in its cloud division with significant investments in developing custom chips to reduce reliance on third-party vendors. Amazon, through its custom chips, aims to provide developers of AI tools with infrastructure to make it an essential entity in the future of AI infrastructure and compete effectively within the dynamic AI environment.
OpenAI-Amazon talks were seen as part of this industry-wide shift, in which capital investment and hardware sector resources are increasingly entwined. OpenAI may use additional investment in its business as leverage in making future plans, such as an initial public offering.
Though the fate of the negotiations is yet to be seen, the situation is a pointer to the massive financial interests at stake in the realm of artificial intelligence, where technology companies are competing to affiliate themselves with the most popular AI platforms.
