Microsoft Corporation (NASDAQ:MSFT) is reportedly in talks to invest US$10 billion into OpenAI, the San Francisco-based company that owns the breakthrough chatbot technology ChatGPT, according to a report from Semafor.
The funding round, which is said to also include venture capital (VC) firms, is expected to value OpenAI at US$29 billion.
The deal documents have been sent to prospective investors in recent weeks, with the aim to close the round by the end of 2022, the Semafor report said.
This news follows a Wall Street Journal exclusive that OpenAI was ready to tap investors, including VCs such as Thrive Capital and Founders Fund.
The Semafor update puts more meat on the bones. It states that the funding terms include Microsoft getting 75% of OpenAI's profits until it recoups its initial investment once OpenAI figures out how to make money on ChatGPT and other products such as the image creation tool Dall-E.
Once Microsoft reaches that threshold, it would have a 49% stake in OpenAI, with other investors taking another 49% and OpenAI's non-profit parent getting 2%, the report said, without clarifying what the stakes would be until Microsoft got its money back.
Microsoft had invested $1 billion in OpenAI in 2019 and was working to launch a version of its search engine Bing using the AI behind ChatGPT, according to a report from The Information last week.
While Microsoft and OpenAI have yet to comment on the reports, it is clear that the use of chatbot technology is becoming increasingly popular and the sector is generating more and more interest from investors.
OpenAI made the ChatGPT chatbot available for free public testing on November 30 last year.
On the back of this, it was the fastest-ever tech firm to 1 million subscribers, hitting the landmark in just under a week.