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Microsoft and OpenAI are in partnership for the last five years. Microsoft has funded OpenAI to the extent of $13 billion. However, OpenAI is still in need of funding, and is expected to lose $5 billion in 2024. The disagreements between employees of the two companies and the financial pressure have strained their five-year-old partnership.

AI startups depend upon Big Tech for money and computing power. In addition, Big Tech controls massive cloud computing systems which small outfits use to develop AI.

The partnership has benefitted both the companies. OpenAI is negotiating again with Microsoft to secure more computing power and reduce expenses. Microsoft is reexaming its dependence for AI work on OpenAI. Microsoft would like to hedge its bet. In March 2024, Microsoft spread $650 billion for manpower needs to hire staff of Inflection, OpenAI’s competitor. Mustafa Suleyman oversees a new Microsoft group working on building AI (based on OpenAI’s software). It is a long term effort that could replace what Microsoft is getting from Open AI.

OpenAI may not like this development. Many Microsoft engineers work onsite at OpenAI’s Offices in San Francisco.

OpenAI is in a bind after Microsoft’s reluctance to fund further. It requires cash to keep things going. It negotiates with other companies to buy computing power.