November 29, 2023
Good morning. In today’s either/view, we discuss whether Microsoft’s bet on OpenAI will continue to pay dividends for both companies. We also look at the new ‘Bee Village’ in Meghalaya, among other news.
📰 FEATURE STORY
Will Microsoft’s bet on OpenAI continue to pay dividends for both companies?
Who do you think will play Sam Altman in the eventual movie or TV series about the recent saga surrounding him and OpenAI? It’s bound to happen. Hollywood loves a good Silicon Valley-set drama à la The Dropout and WeCrashed. After all, there’s an Elon Musk movie in the works based on Walter Isaacson’s biography.
In the case of Altman and OpenAI, things happened quite quickly and abruptly. He left, joined Microsoft, and then returned. With the importance the OpenAI-Microsoft partnership has in the larger tech world, do they both come out of this unscathed? Given how much Microsoft is betting on AI and how much OpenAI is being relied upon, will this partnership continue to blossom?
Context
OpenAI began as an artificial intelligence lab in 2015 as a non-profit. The goal was to build “artificial general intelligence” (AGI). AGI is basically software that’s as smart as humans. The company wanted to be part of a future where big tech companies like Google, for example, didn’t monopolise AI technology. They wanted to build AI software and make open-source products.
A bunch of wealthy entrepreneurs came in with $1 billion. Among them was Elon Musk, who left the company’s board in 2018. Another backer was Sam Altman, who later became the CEO in 2019. Here’s how it would work – OpenAI would use large amounts of data and neural networks to create its products. However, this came at a cost. One early OpenAI employee was paid $1.9 million as salary. Combined with the computation power needed, operating as a non-profit became unfeasible.
In 2019, the transition was made into a for-profit company. Altman, as CEO, looked to take the company into the future. A $1 billion investment from Microsoft certainly didn’t hurt. The tech giant agreed to license and commercialise some of OpenAI’s technology.
Arguably, the first big break came in 2020 with GPT-3, the text-generating tool that could produce text passages on demand. Building on this, the company then released DALL-E in January 2021, which could create images based on human prompts.
In November 2022 came ChatGPT. It was a fine-tuned version of its previous text generators. But this was different. It amazed the public with its humanlike prose and language about any topic. But it also got basic facts wrong and provided sexist and racist responses to human prompts. While people began worrying about this type of technology, it amassed about 100 million users in a few months. Then came the premium offering ChatGPT Plus for $20 per month.
As OpenAI continued to develop its AI tools over the past few years, others weren’t sitting quietly. Google had its language model LaMDA. Microsoft realised AI had potential and decided to open up its wallet. The company’s investment in OpenAI is now estimated to be worth over $13 billion.
For Microsoft, AI will be integrated into its products and services like the Bing search engine, GitHub coding tools, Azure Cloud, etc.
No one, including Microsoft, could anticipate the recent saga of Sam Altman being fired from OpenAI by its board, joining Microsoft, and then returning to OpenAI all in a week. Various theories have been floating around on why the board decided to take such a step, including concerns about their product’s safety. We don’t know the real reason.
The question to be asked is, does this affect the two companies in question in the long run?
VIEW: They’re both secure
It’s abundantly clear how much technology and Silicon Valley companies are betting on AI. Billions are being poured into AI companies and startups. Microsoft is just one such company. They’re being smart with OpenAI. Once Microsoft’s investment is paid back, it will get a percentage of OpenAI LP’s profits up to the agreed-upon cap. As one of OpenAI co-founders Greg Brockman wrote in 2019, investors see this as a sound investment comparable to what they could make investing in any successful startup.
OpenAI’s valuation is estimated to be about $80 billion. The hope is that the company succeeds, and when that happens, Microsoft will benefit. Microsoft stumbled by being unable to build its own AI business. Clippy was removed from Word, and Cortana was removed from the Windows taskbar. The technology giant’s bet on OpenAI could be a masterstroke. They also have the Azure Machine Learning service.
In last December’s annual shareholder meeting, CEO Satya Nadella, speaking on ChatGPT, said it’s all trained on the Azure supercomputer. It’s widely seen as the platform of choice for the next generation of AI applications. What OpenAI and Microsoft have in common, based on what they’ve said, is democratising AI. It gives Microsoft a decent buffer to insulate it from regulatory scrutiny and criticism that Facebook and Google are experiencing in Europe and the US.
COUNTERVIEW: A volatile environment
While things may have calmed down for now, that’s not guaranteed in the future. Broadly speaking, AI has its sceptics. Governments, regulators, and policymakers are unlikely to leave this business alone. Earlier this year, the Center for Artificial Intelligence and Digital Policy asked the Federal Trade Commission (FTC) to stop OpenAI from commercial releases of GPT-4, citing bias and a risk to public safety and privacy.
It’s not just those on the outside. Technology entrepreneurs are also cautious. This includes early backer and former board member Musk. He has voiced his concerns about the company’s unconventional structure and its implications for AI, given Microsoft’s level of ownership. According to him, it’s become a maximum for-profit company controlled by Microsoft.
One prediction to make, irrespective of whether it comes true or not, is an acquisition. If OpenAI announces it’s for sale, Microsoft would be the natural buyer. A deal of this size would obviously attract regulatory scrutiny. Back to the recent firing and re-hiring saga, the fact that no one, including Microsoft, was given a heads-up, doesn’t bode well for future relations with the board. If the OpenAI board had reservations about its products, it highlights an unresolved debate – is AI the most powerful new tool since web browsers or is it dangerous to humans?
Reference Links:
- What to know about OpenAI, the company behind ChatGPT – The Washington Post
- A brief look at the history of OpenAI’s board – TechCrunch
- Microsoft’s $13 billion bet on OpenAI carries huge potential along with plenty of uncertainty – CNBC
- Microsoft emerges as big winner from OpenAI turmoil – Reuters
- Microsoft Emerges as the Winner in OpenAI Chaos – Wired
- The Real Reasons Microsoft Invested In OpenAI – Forbes
- OpenAI/Microsoft: non-profit’s mission is at odds with its biggest investor – Financial Times
What is your opinion on this?
(Only subscribers can participate in polls)
a) Microsoft’s bet on OpenAi will pay dividends for both companies.
b) Microsoft’s bet on OpenAi won’t pay dividends for both companies.
🕵️ BEYOND ECHO CHAMBERS
For the Right:
Big fat weddings are India’s soft power abroad, just like Bollywood. Don’t stop this export
For the Left:
Left politicising Palestinian issue just to reap electoral benefits ahead of the 2024 polls
🇮🇳 STATE OF THE STATES
HC criticises school amenities (Haryana) – The Punjab and Haryana High Court has criticised the Haryana government for its insensitivity regarding poor amenities in state-run schools. The court’s response came after a petition highlighted the lack of basic facilities like electricity, toilets, and drinking water in many schools. According to the government’s affidavit, significant funds are required to improve these conditions, including ₹947.60 crore for additional classrooms and ₹703.75 crore for other rooms.
Why it matters: Justice Vinod S Bhardwaj pointed out the absence of toilets in 538 girls’ schools and a lack of a clear action plan from the authorities. Former Chief Minister Bhupinder Singh Hooda and Congress General Secretary Kumari Selja criticised the current government’s handling of education. The court noted a surrender of ₹10,675.99 crore from allocated funds for education over ten years, indicating underutilisation and inefficiency in addressing the core issues in the state’s education system.
Pavalakodi Kummi game (Tamil Nadu) – The 66th edition of the Pavalakodi Kummi game, a traditional folk dance event, was celebrated with enthusiasm at Poyampalayam in Tiruppur district, Tamil Nadu. Over 400 women participated, showcasing various Kummi dance forms, a popular folk dance in Tamil Nadu and Kerala. Led by Kummi teacher Viswanathan, the event attracted a large audience, with dancers wearing green sarees and performing for five hours.
Why it matters: The Pavalakodi Kummi game serves as a platform for community engagement, showcasing local traditions and fostering a sense of unity. Participants ranged from 10-year-old children to 30-year-old women, all dancing to folk songs and imitating harvesting techniques, a common theme in Kummi dances. The event, also celebrated in Coimbatore and Erode, saw audience members joining in the dance.
Concern over illness outbreak (Chhattisgarh) – In light of the recent outbreak of respiratory illnesses among children in China, the Chhattisgarh government, led by Deputy Chief Minister TS Singhdeo and Chief Minister Bhupesh Baghel, is taking proactive measures for preparedness. While the Government of India has indicated that the situation is not a cause for immediate concern, Chhattisgarh is implementing precautionary steps.
Why it matters: Singhdeo emphasized the importance of readiness in the face of the evolving situation, and the state’s health department is preparing to address any challenges. The Chief Minister also stated the need for readiness, instructing officials to enhance resources, improve testing facilities, and implement infection control practices to combat any potential threat from the illness.
Inspirational journey of Rajkaran Barua (Madhya Pradesh) – Rajkaran Barua, a 56-year-old security guard and house help from Jabalpur, has become a symbol of perseverance and academic dedication by earning a post-graduate degree in mathematics from Rani Durgavati University. This achievement marks his second master’s degree, the first being in archaeology obtained in 1996. Barua’s journey to this milestone was challenging, marked by 23 unsuccessful attempts over 25 years while working tirelessly to support his education.
Why it matters: Overcoming language barriers and facing social stigma, he managed to pass his final exams by studying from a book written by an Indian author. Barua’s commitment to his dreams, undeterred by societal pressures and financial hardships, is an extraordinary testament to his dedication and resilience.
New ‘Bee Village’ (Meghalaya) – The state government has officially declared Chigitchakgre village in the West Garo Hills District as a ‘Bee Village.’ This initiative is part of the state’s Apiculture Mission, aimed at supporting bee farmers with various forms of assistance. Chief Minister Conrad K Sangma announced that the village would receive comprehensive support for bee farming, including training, financial aid, bee boxes, beekeeping tools, and infrastructure for product display and sales.
Why it matters: The declaration of the village as a Bee Village is intended to boost honey production and promote apitourism. Furthermore, the Chief Minister announced a grant of ₹10 lakh from the Chief Minister’s Special Development Fund to support these endeavours and to ensure the quality and marketability of the honey produced in the village.
🔢 KEY NUMBER
₹1,500 crore – BharatPe, launched in 2018, turned profitable with an annualised revenue of ₹1,500 crore, as confirmed by CFO and interim CEO Nalin Negi on November 28.