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Microsoft Corp is in discussions to invest $10 billion in OpenAI, the owner of ChatGPT, valuing the San Francisco-based company at $29 billion, according to Semafor, citing people familiar with the situation.
Other venture firms have contributed to the money, and transaction paperwork have been distributed to prospective investors in recent weeks, with the goal of closing the round by the end of 2022, according to the report.
Microsoft declined to comment, and OpenAI did not react quickly to Reuters’ request for comment.
This comes after the Wall Street Journal reported that OpenAI was in discussions to sell current shares at a valuation of around $29 billion, with venture capital companies such as Thrive Capital and Founders Fund purchasing shares from existing owners.
On November 30, OpenAI, which was created by Tesla Inc CEO Elon Musk and investor Sam Altman, made the ChatGPT chatbot accessible for free public testing. A chatbot is a software program that uses user input to simulate human-like communication.
In the Semafor report, the funding terms include Microsoft receiving 75% of OpenAI’s income until it recoups its initial investment once OpenAI works out how to generate money on ChatGPT and other products such as picture creation tool Dall-E.
When Microsoft reaches that level, it will own 49% of OpenAI, with other investors owning 49% and OpenAI’s nonprofit parent owning 2%, according to the report, which does not specify what the stakes will be until Microsoft receives its money back.
Microsoft, which invested $1 billion in OpenAI in 2019, was planning on launching a version of its search engine Bing that would include the AI underlying ChatGPT.