OpenAI Weighs 'Nuclear Option' of Antitrust Complaint Against Microsoft (arstechnica.com) 19
An anonymous reader quotes a report from Ars Technica: OpenAI executives have discussed filing an antitrust complaint with US regulators against Microsoft, the company's largest investor, The Wall Street Journal reported Monday, marking a dramatic escalation in tensions between the two long-term AI partners. OpenAI, which develops ChatGPT, has reportedly considered seeking a federal regulatory review of the terms of its contract with Microsoft for potential antitrust law violations, according to people familiar with the matter. The potential antitrust complaint would likely argue that Microsoft is using its dominant position in cloud services and contractual leverage to suppress competition, according to insiders who described it as a "nuclear option," the WSJ reports.
The move could unravel one of the most important business partnerships in the AI industry -- a relationship that started with a $1 billion investment by Microsoft in 2019 and has grown to include billions more in funding, along with Microsoft's exclusive rights to host OpenAI models on its Azure cloud platform. The friction centers on OpenAI's efforts to transition from its current nonprofit structure into a public benefit corporation, a conversion that needs Microsoft's approval to complete. The two companies have not been able to agree on details after months of negotiations, sources told Reuters. OpenAI's existing for-profit arm would become a Delaware-based public benefit corporation under the proposed restructuring.
The companies are discussing revising the terms of Microsoft's investment, including the future equity stake it will hold in OpenAI. According to The Information, OpenAI wants Microsoft to hold a 33 percent stake in a restructured unit in exchange for foregoing rights to future profits. The AI company also wants to modify existing clauses that give Microsoft exclusive rights to host OpenAI models in its cloud. The restructuring debate attracted criticism from multiple quarters. Elon Musk alleges that OpenAI violated contract provisions by prioritizing profit over the public good in its push to advance AI and has sued to block the conversion. In December, Meta Platforms also asked California's attorney general to block OpenAI's conversion to a for-profit company.
The move could unravel one of the most important business partnerships in the AI industry -- a relationship that started with a $1 billion investment by Microsoft in 2019 and has grown to include billions more in funding, along with Microsoft's exclusive rights to host OpenAI models on its Azure cloud platform. The friction centers on OpenAI's efforts to transition from its current nonprofit structure into a public benefit corporation, a conversion that needs Microsoft's approval to complete. The two companies have not been able to agree on details after months of negotiations, sources told Reuters. OpenAI's existing for-profit arm would become a Delaware-based public benefit corporation under the proposed restructuring.
The companies are discussing revising the terms of Microsoft's investment, including the future equity stake it will hold in OpenAI. According to The Information, OpenAI wants Microsoft to hold a 33 percent stake in a restructured unit in exchange for foregoing rights to future profits. The AI company also wants to modify existing clauses that give Microsoft exclusive rights to host OpenAI models in its cloud. The restructuring debate attracted criticism from multiple quarters. Elon Musk alleges that OpenAI violated contract provisions by prioritizing profit over the public good in its push to advance AI and has sued to block the conversion. In December, Meta Platforms also asked California's attorney general to block OpenAI's conversion to a for-profit company.
What are they going to do? (Score:3)
Nuclear Option (Score:2)
They may need Nuclear power to keep their servers running.
Enforce copywrite law (Score:1)
nt
Everybody Sucks Here (Score:3)
I do appreciate though OpenAI declaring war on Microsoft for the unforgivable sin of... being right about their success and believing in them and making a wise investment? OpenAI was free to say no to that money, they were back then all about the non-profit public good right? Right? No, seems like they always planned to cash in hard as possible if they could? Imagine that.
Re: (Score:3)
On the contrary, I suspect the issue is - they're seeing the upcoming "we've ridden this horse as far as it can go" wall they're about to run into, and they want to get rich quick before that wall becomes apparent to the wider population.
Re: (Score:2)
My thoughts too.
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I found this interesting:
"If a non-profit company decides to stop doing business and dissolve, it must distribute its assets among other non-profits ... If a benefit corporation decides to stop doing business and dissolves, the shareholders receive the proceeds of the sales of assets, after liabilities are paid.
https://www.delawareinc.com/bl... [delawareinc.com]
Re: (Score:2)
Is it their tech or were they just first to market and get massive brand recognition because there's like nonstop stories here about different AI models and LLMs. I guess OpenAI is out in front but is it really that far out in front at this point? That's a genuine question, I don't know but it would have been nice if they had become like the other orgs, be the industry leader through standards and methods, more like the Associated Press of AI or SAE maybe is more apt.
Basics of Investment (Score:2)
That's a nice arrangement that OpenAI wants. "Invest in us when we're small and fund our development... and then keep all the money once we hit it big." You mean to tell me that Microsoft wants a return on their very large and very high risk investment?!
Not so much antitrust (Score:2)
Where's the monopoly? OpenAI isn't the only player in the LLM market. Likewise, there are other cloud providers upon which to host the system. There are also numerous sources of capital waiting in the wings should Microsoft pull out.
This sounds more like a pissing contest between the original investor (who wants to maintain their position) and a bunch of employees who want to cash out lucrative options.
Um ... (Score:2)
I've never seen a movie where the words AI and nuclear work out well for us humans.
Another decade of lawyers arguing with Microsoft? (Score:3)
"Nuclear" is not really a good description for a decade(s) long anti-trust case.
I've nearly already fallen asleep at the possibility this amazing option may get exercised.
Re: (Score:2)
They would need to actually have a case for it to drag out for a decade.
More likely it would get tossed after a few hearing and refiling cycles.
I'd give it three years, tops.