OpenAI and Microsoft have a secret definition of “AGI,” which is an acronym for artificial general intelligence, or any system that can outperform humans in most tasks. According to leaked documents obtained by The Information, in 2023, the two companies agreed that AGI would be achieved when OpenAI developed an AI system that could generate at least $100 billion in revenue.
The AI community has long been debating what AGI actually means and whether computers will ever surpass humans in most tasks and wipe out a significant part of the economy.
The term “artificial intelligence” itself is somewhat of a misnomer, as much of it is simply a prediction machine that inputs keywords and searches large amounts of data without understanding the concepts behind it. But OpenAI has received more than $13 billion in funding from Microsoft over the years, and that money came with a strange contractual agreement that OpenAI would stop allowing Microsoft to use any new technology it develops once AGI is reached.
OpenAI was founded as a non-profit organization under the guise that it would use its influence and any AGI that was developed to create products that would benefit all of humanity. The idea behind Microsoft’s disconnect from AGI is that unrestricted access to OpenAI’s intellectual property could overly concentrate power in the hands of the tech giant. To encourage it to invest billions in the nonprofit, Microsoft’s current agreement with OpenAI entitles it and other investors to a portion of the profits until they raise $100 billion; the restriction is meant to ensure that most of the profits ultimately go back into creating products that will supposedly benefit all of humanity. This is all talk of the future because, again, AI is not that powerful at the moment.
OpenAI’s non-profit structure has long been considered a farce, and it is not surprising that this year the company announced its intentions to transform into a for-profit entity (while maintaining its mission to benefit all of humanity), as the current non-profit structure makes it difficult to raise additional funds and compete with other players in the AI market. As a result, according to The Information, Microsoft and OpenAI are negotiating a number of changes to their agreement that would occur in the event of a restructuring of the company. Currently, Microsoft is also the exclusive cloud hosting provider for OpenAI, and OpenAI may want to terminate this agreement, as well as stop profit sharing and switch to direct equity investment in Microsoft.
The paths of Microsoft and OpenAI have been diverging for some time. Recently, it was reported that the latter has begun to incorporate artificial intelligence models developed in-house into its 365 Copilot product in order to improve cost and efficiency. It makes no sense for Microsoft to continue to rely on OpenAI, an independent company that develops similar productivity tools, to choose the technology it believes will be the foundation of its productivity software in the future. Especially considering all the chaos and drama surrounding OpenAI. Microsoft needs its own technology to pave its own way.
OpenAI is a long way from reaching $100 billion in revenue on technology whose true value remains speculative, meaning it will likely have to continue to outsource its technology and profits to Microsoft for a long time – not a good thing as they are getting closer to becoming competitors and OpenAI is looking for new investors, which it will need as it continues to spend billions of dollars in cash. Getting rid of the tie to cloud hosting could also allow OpenAI to negotiate a better hosting rate with an alternative provider, which Google reported to the FTC in a letter calling for the deal to be voided.
