OpenAI and Microsoft Are Partners, Until They Vie for the Same Customers

OpenAI's ChatGPT has enraptured the business world since its November release and OpenAI is signing up customers eager to pay to use its artificial intelligence models in their own products. But the Microsoft-backed startup faces a surprising rival: Microsoft itself. From a report: As part of its multibillion-dollar investment in OpenAI, Microsoft has the rights to sell the startup's software through its Azure cloud business, even as OpenAI licenses its own software directly to customers. Microsoft also gets a share of OpenAI's profits. The offerings cost the same, a fraction of a cent per query. Meanwhile, all of OpenAI's technology runs on Microsoft's Azure cloud infrastructure rent free. The dual offerings mean the companies are at times pitching the same customers on nearly identical products, putting salespeople at Microsoft in the uneasy position of trying to lure customers away from OpenAI while touting its technology. While the profit-sharing agreement means sales of either offering theoretically benefit both companies, OpenAI pursues direct relationships with big customers, such as Microsoft rival Salesforce, which has licensed ChatGPT for a new suite of customer service software. It's not clear whether the partnership between OpenAI and Microsoft dictates the price each company sets for the models. Microsoft gets 75% of OpenAI's profits until its investment is paid back and 49% of subsequent profits up to a certain cap, The Information previously reported. It's also not clear how much profit Microsoft returns to OpenAI for the models it sells through Azure OpenAI Service. [...] An internal Microsoft document, viewed by The Information, instructs Azure salespeople to tell potential customers that OpenAI's own licenses are "great [for] experimentation" but have "limited enterprise-grade capabilities" and fewer "security/privacy features."

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