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Microsoft in Talks to Invest $10 bln in ChatGPT Owner -Semafor

Smartphone is seen in front of Microsoft logo displayed in this illustration taken, July 26, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
Smartphone is seen in front of Microsoft logo displayed in this illustration taken, July 26, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
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Microsoft in Talks to Invest $10 bln in ChatGPT Owner -Semafor

Smartphone is seen in front of Microsoft logo displayed in this illustration taken, July 26, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
Smartphone is seen in front of Microsoft logo displayed in this illustration taken, July 26, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

Microsoft Corp is in talks to invest $10 billion into OpenAI, the owner of ChatGPT, which will value the San Francisco-based firm at $29 billion, Semafor reported on Monday, citing people familiar with the matter.

The funding includes other venture firms and deal documents were sent to prospective investors in recent weeks, with the aim to close the round by the end of 2022, the report said.

Microsoft declined to comment, while OpenAI did not immediately respond to Reuters' request for comment.

This follows a Wall Street Journal report that said OpenAI was in talks to sell existing shares at a roughly $29 billion valuation, with venture capital firms such as Thrive Capital and Founders Fund buying shares from existing shareholders.

OpenAI, founded by Tesla Inc CEO Elon Musk and investor Sam Altman, made the ChatGPT chatbot available for free public testing on Nov. 30. A chatbot is a software application designed to mimic human-like conversation based on user prompts.

The Semafor report said the funding terms included 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 like image creation tool Dall-E.

On hitting that threshold, Microsoft would have a 49% stake in OpenAI, with other investors taking another 49% and OpenAI's nonprofit parent getting 2%, the report said, without clarifying what the stakes would be until Microsoft got its money back.

Microsoft, which invested $1 billion in OpenAI in 2019, was working to launch a version of its search engine Bing using the AI behind ChatGPT, the Information reported last week.

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Trump Expected to Shift Course on Antitrust, Stop Google Breakup

The Google logo is seen on the Google house at CES 2024, an annual consumer electronics trade show, in Las Vegas, Nevada, US, January 10, 2024. (Reuters)
The Google logo is seen on the Google house at CES 2024, an annual consumer electronics trade show, in Las Vegas, Nevada, US, January 10, 2024. (Reuters)
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Trump Expected to Shift Course on Antitrust, Stop Google Breakup

The Google logo is seen on the Google house at CES 2024, an annual consumer electronics trade show, in Las Vegas, Nevada, US, January 10, 2024. (Reuters)
The Google logo is seen on the Google house at CES 2024, an annual consumer electronics trade show, in Las Vegas, Nevada, US, January 10, 2024. (Reuters)

Donald Trump will likely dial back some of the antitrust policies pursued under the administration of President Joe Biden, potentially including a bid to break up Alphabet's Google over its dominance in online search, experts said.

Trump is expected to continue cases against Big Tech, several of which began in his first term, but his recent skepticism about a potential Google breakup highlights the power he will hold over how those cases are run.

"If you do that, are you going to destroy the company? What you can do without breaking it up is make sure it's more fair," he said at an event in Chicago in October, Reuters reported.

The US Department of Justice is currently pursuing two antimonopoly cases against Google - one over search and another over advertising technology, as well as a case against Apple . The US Federal Trade Commission is suing Meta Platforms and Amazon.com.

The DOJ has laid out a range of potential remedies in the search case, including making Google divest parts of its business such as the Chrome Web browser and ending agreements that make it the default search engine on devices like Apple's iPhone.

But the trial over those fixes will not happen until April 2025, with a final ruling likely in August. That gives Trump and the DOJ time to change course if they choose, said William Kovacic, a law professor at George Washington University.

"He is certainly in the position to control the DOJ's disposition of the remedies phase," said Kovacic, who chaired the Federal Trade Commission under then-president George W. Bush.

Trump is also likely to pull back on some policies that have irritated dealmakers under the Biden administration, attorneys said. One is a reluctance to settle with merging companies, which was previously common and let companies address competition problems that agencies raised about deals by taking actions like selling part of the business.

The FTC and DOJ would likely scrap merger review guidelines crafted under Biden, said Jon Dubrow, a partner at law firm McDermott Will & Emery.

"The 2023 merger guidelines were very hostile to mergers and acquisitions," he said, echoing a view widely held on Wall Street.

The FTC's ban on most noncompete clauses in employer-employee contracts could be more vulnerable to a lawsuit brought by the US Chamber of Commerce, if the FTC votes not to defend it.

About 30 million people, or 20% of US workers, have signed noncompetes, according to the FTC. The agency is currently appealing a court ruling that blocked the rule.

But such actions to dismantle the work of FTC Chair Lina Khan will depend on a Trump-appointed replacement being confirmed to give the bipartisan five-member commission a Republican majority.

Khan's initiatives focused on what she saw as societal harms caused by unchecked corporate consolidation, drawing praise from both Democrats and some Republicans, including Vice President-elect JD Vance. But some in the business and legal communities have criticized her approach as too aggressive.

Trump is not expected to drastically curtail antitrust enforcement, however. A similar number of merger cases was brought under his first term as during the first two years of the Biden administration, according to an analysis by the Sheppard Mullin law firm.