‘The best bromance in tech’ is under strain: it’s between OpenAI and Microsoft

Sam Altman, the co-founder of OpenAI called its partnership with Microsoft, “the best bromance in tech,” but this is at risk now as Microsoft tries more and more to hedge its bets, according to a New York Times report.

This started after Altman’s brief ouster by OpenAI’s board last November; An incident that shocked and concerned Microsoft CEO Satya Nadella, according to the report which added that Microsoft has been increasingly hesitant in supplying OpenAI with the cash and computing power it needs as it expects to lose $5 billion this year.

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OpenAI’s annual computing expenses are also expected to skyrocket to $37.5 billion by 2029.

Apart from OpenAI’s financial pressures, concerns about its stability and disagreements between employees of both the companies has also contributed to the strain in the five-year partnership, the report read.

Why did OpenAI and Microsoft employees clash?

Microsoft had been increasingly concerned that its AI work is too dependent on OpenAI, so it spent $650 million to hire most of the staff from Inflection, an OpenAI competitor, with even its co-founder, Mustafa Suleyman, overseeing a new Microsoft team working on AI consumer products based on OpenAI software.

However, this has angered dozens of OpenAI executives including Altman, with some OpenAI staff complaining Suleyman yelled at an OpenAI employee during a video call since he thought a new technology wasn’t delivered to Microsoft quick enough.

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Other complaints followed after Microsoft engineers downloaded important OpenAI software without following the protocols the two companies had agreed on, according to the report.

What has OpenAI done for funding since?

OpenAI’s exclusive deal with Microsoft was to buy computing power from Microsoft and work closely on new AI products, but OpenAI has also tried to renegotiate the deal to get more computing power and reduce its huge expenses, according to the report.

After seeing the cold shoulder increasingly from Microsoft, the AI giant has now tried to negotiate a lower cost of computing power from other companies, with Oracle being the major one, after Microsoft agreed to an exception in the contract.

OpenAI signed a roughly $10 billion computing deal with Oracle for additional computing resources, according to the report.

OpenAI also looked for other investors. These included Apple (Potential partnership meetings have went on for years, with Apple eventually agreeing to put ChatGPT on the iPhone), Nvidia (As it can provide chips), and UAE-based tech investment firm MGX (To build new data centres globally).

Though Apple did not invest, OpenAI closed a $6.6 billion funding round by Thrive Capital, with additional participation from Nvidia, MGX and others, according to the report.

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