Microsoft reportedly plans to make a $10 billion investment in ChatGPT creator OpenAI.

Microsoft has been in talks to invest $10 billion into the startup, according to Semafor, The software giant reportedly would get a 75% share of OpenAI’s profits until it makes back the money on its investment. After that, Microsoft would assume a 49% stake in OpenAI.

ChatGPT is a chatbot launched by OpenAI last November. ChatGPD is known for its detailed responses and articulate answers across many domains of knowledge. Following the release of ChatGPT, OpenAI reportedly was valued at $29 billion.

In October, The Information reported that Microsoft, which had invested $1 billion in cash and cloud credits into OpenAI in 2019, was in talks to increase its stake. It also reported that Microsoft has discussed incorporating OpenAI’s artificial intelligence (AI) in Word, PowerPoint, Outlook and other apps.

Microsoft said it doesn’t comment on speculation and doesn’t have anything to share at this time.

Enhancing Microsoft Products with NLP

Eric Hanselman is chief analyst with 451 Research, part of S&P Global Market Intelligence.

451 Research’s Eric Hanselman

“Getting access to OpenAI’s natural language processing (NLP) capabilities could enhance [Microsoft’s] products and make them easier to use,” he said. “Virtual assistance is a key technology for any technology portfolio, as customers look for simpler and more powerful ways to interact with products and services. NLP offers a more human-friendly way to interact with products.”

Any investment carries risk, Hanselman said. However, other investors share this investment, and OpenAI has demonstrated technology that’s directly applicable to much of what Microsoft does.

“This is an extension of an existing relationship between Microsoft and OpenAI,” he said. “Microsoft has already been providing Azure cloud credits to OpenAI and this investment formalizes that relationship.”

This deal would give OpenAI a cash reserve to fund research as they explore ways to monetize their technology, Hanselman said.

“A tie to a vendor like Microsoft who could integrate their technology into a broad suite of products and services could be a way to accelerate their entrance into what is already a complex market,” he said.