OpenAI and Microsoft reached a deal to complete the startup's shift to for-profit. Jason Hiner, editor in chief for ZDNET, joins to break down the deal's impact.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

OpenAI has transitioned into a for-profit company, now known as OpenAI Group PBC, following a significant investment deal with Microsoft. Microsoft holds a 27% stake in the new for-profit entity, while the non-profit OpenAI Foundation retains 26%, and the remaining 47% is owned by current and former employees and investors.

The restructuring comes as OpenAI and Microsoft revise their long-standing partnership to better align their goals in developing artificial general intelligence (AGI). The updated agreement ensures Microsoft will maintain access to OpenAI's models through 2032, even if OpenAI declares it has achieved AGI, a claim that must now be verified by an independent board of experts.

OpenAI strikes major deal with Microsoft

Open AI has officially restructured into a for-profit company that will be controlled by its non-profit arm. The chat GPT maker was able to make this move after striking a deal with Microsoft, which is its largest investor. Microsoft now holds a 27% share in Open AI Group PBC. That's the for-profit arm. The non-profit Open AI Foundation will hold 26%. Current and former employees and investors make up the other 47%. Are you following along with us here? Jason Hiner certainly is. He's the editor-in-chief of ZDNet and joins us to help us understand what this means. Jason, welcome and good morning. Why is Open AI making this decision? I guess experts weren't surprised. Yeah. Why are they doing it? And what does it mean for the rest of us? Yeah, Microsoft is the original and most important investor in Open AI and they had a deal going back to 2019 that allowed the development of Open AI to progress in a certain direction and for Microsoft to have an interest in it. But over time now Open AI has become a much larger company, a much more important company, arguably one of the most important companies in the world. They need to pursue the future of AI and especially AGI or artificial general intelligence in a certain way and Microsoft also wants to pursue it in a certain way and they needed to revise the original terms of their agreement to do it. Now, the general intelligence concept is fascinating to me because I'm oversimplifying here. Yeah, but a lot of technology is now built on the backbone of Open AI. This is a system that scrapes available information on the web and tries to regurgitate it to us conversationally, but it doesn't really think. It's not really intelligent the way we think. So, how does this get the company closer to general intelligence, which, correct me if I'm wrong, is a system that can really think? That's right. It's more like PhD level intelligence, having been able to have a conversation with a PhD level expert. What they want to do is they want to pursue AGI in the ways that are most available to them based on computing power, based on all of the research that they're doing and this agreement allows Microsoft and Open AI to pursue that a little bit separately. Also, the original agreement had this one little asterisk in it, which was like once that Microsoft had rights to Open AI's models, the power of AI, until it became clear that they had achieved AGI, then it no longer had rights to them. This agreement changes that. It says that once Open AI declares it's reached AGI, which is really a marketing term and not a technical term, we should be clear, that it has to be verified by an independent board of experts and Microsoft still gets access through 2032 with this agreement, even if Open AI declares AGI. So, that's an important thing that they needed to get through. So, they had to wiggle through some new fine print. They did. It's still changing the way we do just about everything, so I appreciate you coming in and helping us understand it. Folks should read your work. Jason Heiner, thanks so much. Thanks for having me.

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OpenAI strikes major deal with Microsoft

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