Artificial-Intelligence: Microsoft Corp. To Invest $1 Billion In AI Startup OpenAI


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Microsoft Corp. said Monday that it would invest $1 billion in artificial-intelligence startup OpenAI, as the software giant seeks to enhance its Azure cloud-computing platform. The companies said they would jointly develop supercomputing technologies for Azure, a fast-growing system that has helped propel Microsoft’s growth as the world’s most valuable public company.

Microsoft and OpenAI plan to work on artificial general intelligence, they said. That area represents a more futuristic version of AI that aims to work across different fields, rather than being more narrowly focused on specific tasks such as writing or translation.

Microsoft has been adding features to Azure to drive growth. Azure is second in size to Amazon.com Inc. ’s AWS cloud-computing product. Microsoft said last week that Azure sales rose 64% in the most recent quarter, compared with a year earlier.

“The quintessential characteristic for any application being built in 2019 and beyond will be AI,” Chief Executive Satya Nadella said on an earnings call Thursday.

“This is a big investment for Microsoft, even at their size,” said Stifel analyst Brad Reback. “They’ll do scores of acquisitions annually but most of them tend to be smaller technology tuck-ins.”


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OpenAI was launched in 2015 as a nonprofit with a goal of leading efforts to develop artificial general intelligence. It competes with Alphabet Inc. ’s DeepMind Technologies and others. OpenAI is led by CEO Sam Altman, a former president of startup accelerator Y Combinator.

The Microsoft investment signals a vote of confidence in OpenAI’s recent transformation into a private company from a nonprofit. In March, OpenAI revamped its legal structure to raise more money and gain scale, which enabled it to accept the investment from Microsoft.

Greg Brockman, OpenAI’s co-founder and chairman, said the company planned to spend the Microsoft investment in no more than five years. As part of the deal, OpenAI will run its services on Azure and use Microsoft as its preferred partner to commercialize its AI technologies.


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Microsoft in recent years has focused on expanding into AI, Wedbush analyst Dan Ives said. With the OpenAI deal, he said, “Microsoft is trying to find ways to commercialize and monetize their AI investments.”

Mr. Ives estimates that sales from AI-related products and services could represent a $75 billion to $100 billion market over the next decade.


Microsoft Corporation Company Profile:

Microsoft Corporation is a technology company. The Company develops, licenses, and supports a range of software products, services and devices. The Company’s segments include Productivity and Business Processes, Intelligent Cloud and More Personal Computing.

The Company’s products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games, and training and certification of computer system integrators and developers.

It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings.

It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services.


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