2024-11-01
Microsoft disclosed the number of its
investment in OpenAI Global, LLC (OpenAI), for the first time, acknowledging in its quarterlyregulatory filing that it has made total funding commitments of $13 billion to
OpenAI, ChatGPT maker; with an additional $750 million invested in October
20241.
Microsoft’s investment in OpenAI is
accounted for under the equity method, referencing a type of accounting used to
record one company’s share of another company’s profits or losses.
Microsoft acknowledged that losses from
its stake in OpenAI were part of the reason that it recorded a $683 million
expense related to its equity investments in the quarter. This has resulted in
a $683 million expense related to equity investments in the quarter.
Despite the financial impact,
Microsoft's AI business is on track to exceed a $10 billion annual revenue run
rate1. The company's Azure OpenAI service usage has doubled in the last six
months, contributing significantly to a 33% increase in Azure cloud revenue
Previosly, a report from the New York
Times indicates some tension between the two companies. OpenAI is reportedly
seeking greater independence from Microsoft, while Microsoft is keen on
leveraging OpenAI's technology for its own AI offerings.
Satya Nadella, Microsoft CEO, said that
the partnership for both OpenAI and Microsoft has been super beneficial.
Microsoft’s investment in OpenAI 5 years ago has led to great success for both
companies. Microsoft provides OpenAI
with the infrastructure it needs.
Microsoft CEO, Satya Nadella, said the
two companies continue to work together. And this cooperation creates value for
both companies.
