TheChek News Flow

The artificial intelligence giant is closing in on a deal with Microsoft regarding its future governance, but other questions stand over its huge costs.

OpenAI appears to be moving closer to resolving an existential crisis, reaching a tentative agreement to rework its partnership with Microsoft.

A finalized deal would help the artificial intelligence start-up in its quest to convert into a for-profit company, a crucial step to unlocking billions more in funding. But even that doesn’t lift all the questions that are hanging over the ChatGPT maker, as investors continue to show concerns about the A.I. boom.

What we know about the OpenAI-Microsoft talks so far:

• The Times reports that the two have agreed to rework a clause in their original agreement that would rescind Microsoft’s access to OpenAI’s most advanced technology once the start-up had achieved so-called artificial general intelligence. (Read: A.I. as capable as a human brain, though the definition is hazy.)
• The Financial Times reports that Microsoft is also set to take a roughly 30 percent stake in a reorganized OpenAI once it becomes a for-profit company, worth perhaps $170 billion. The nonprofit organization that currently controls OpenAI will get a stake worth at least $100 billion, or more than 20 percent of the for-profit entity.

The stakes are huge. Establishing a for-profit structure (via a public benefit corporation) would let OpenAI eventually go public and raise money from outside investors. Nearly $20 billion worth of funds it has raised during the past year is contingent on the conversion.

For Microsoft, maintaining its uniquely close ties to a leading A.I. developer — even if it’s reportedly deepening its relationship with rivals like Anthropic — will help it maintain a technological lead over competitors including Google. Shares in Microsoft are up 1.2 percent in premarket trading on Friday.

OpenAI still faces questions about its future. Company executives are worried about the possibility state regulators in California and Delaware could block the conversion. (Elon Musk is also fighting the move.)

Then there’s the sheer cost of researching and running A.I. Consider:

All that rests on the assumption that OpenAI’s finances will keep up with the rocket-like growth of ChatGPT use. But The Wall Street Journal points to recent research that calls into question whether customers will open their wallets as wide as expected.