Microsoft is worth $4T, so if you buy one MSFT share only ~3% of that is invested in OpenAI. Even if OpenAI outperforms everyone's expectations (which at this point are already sky high), a tiny swing in some other Microsoft division will completely erase your gains.

> "Microsoft’s IP rights now exclude OpenAI’s consumer hardware."

Relevant and under-appreciated.

   1. OpenAI considers its consumer hardware IP serious enough to include in the agreement (and this post)
   2. OpenAI thinks it's enough of a value differentiator they'd rather go alone than through MS as a hardware partner

I think it's a bit late for that.

Also, you have to consider the size of Microsoft relative to its ownership of OpenAI, future dilution, and how Microsoft itself will fare in the future. If, say, Microsoft is on a path towards decreasing relevance/marketshare/profitability, any gains from its stake in OpenAI may be offset by its diminishing fortunes.

I think the stable coin company Tether is valued at 500 billion also.

> This also confirms the $500 billion valuation making OpenAI the most valuable private startup in the world.

SpaceX?

Or for the inevitable crash when we discover that OpenAI is a round tripping Enron style disaster.

It’s odd to me in clouds you excluded AWS.

if you want to invest in open ai I think you can just buy it on NASDAQ private markets.

Honestly, I wouldn't be surprised if OpenAI has done the math and determined that even releasing frontier quality models wouldn't put much of a dent in either their B2B or B2C businesses. Or, rather, that any such dent would be vastly overshadowed by the value of fending off potential competitors.

I haven't looked too much into Deepseek's actual business, but at least Mistral seemed to be positioning themselves as a professional services shop to integrate their own open-weight models, compliant with EU regulations etc, at a huge premium. Any firm that has the SOA open model could do the same and cannibalize OpenAI's B2B business---perhaps even eventually pivoting into B2C---especially if regulations, downtime or security issues make firms more cloud-skeptical with respect to AI. As long as OpenAI can establish and hold the lead for best open-weight/on-premise model, it will be hard for anyone to justify premium pricing so as to generate sufficient cash flow from training their own models.

I can even imagine OpenAI eventually deciding that B2C is so much more valuable to them than B2B that it's worth completely sinking the latter market...

> Hard to say what a "longer period of time" means, but I presume it is substantial enough to make this a major concession from OpenAI.

Depends on how this is meant to be parsed but it may be parsed to be a concession from MSFT. If the total amount of revenue to be shared is the same, then MSFT is worse off here. If this is meant to parse as "a fixed proportion of revenue will be shared over X period and X period has increased to Y" then it is an OAI concession.

I don't know the details but I would be surprised if there was a revenue agreement that was time based.

As a corporate customer, the main point for me in this is Microsoft now retaining (non-exclusive) rights to models and products after OpenAI decides to declare AGI.

The question "Can we build our stuff on top of Azure OpenAI? What if SamA pulls a marketing stunt tomorrow, declares AGI and cuts Microsoft off?" just became a lot easier. (At least until 2032.)

Maybe OpenAI is burning money heavily and MS is the only/best partner to get it from?

Also for MS it is worth to keep investing little by little,getting concessions from OpenAI and becoming the de facto owner of it.

The nonprofit will own 26%, and a warrant that it will get more shares if the share price grows more than 10 times after 15 years. Sam Altman is getting no shares as part of this restructuring.

Nevermind, looks like the nn-profit gave up voting control lol:

"All equity holders in OpenAI Group now own the same type of traditional stock that participates proportionally and grows in value with OpenAI Group’s success. The OpenAI Foundation board of directors were advised by independent financial advisors, and the terms of the recapitalization were unanimously approved by the board."

Truly, truly the greatest theft from mankind in history and they dress it up as if the non-profit is doing anything other than giving away the most valuable startup in history for a paltry sum.

Credit where credit is due, Sam Altman is the greatest dealmaker of all time.

Will be interesting if we get to hear what his new equity stake is!

> The two companies reportedly signed an agreement [in 2023] stating OpenAI has only achieved AGI when it develops AI systems that can generate at least $100 billion in profits.

https://techcrunch.com/2024/12/26/microsoft-and-openai-have-...

This. This sentence reached off the page and hit me in the face.

It only just then became obvious to me that to them it's a question of when, in large part because of the MS deal.

Their next big move in the chess game will be to "declare" AGI.

If I remember correctly, Microsoft was previously promised ownership of every pre-AGI asset created by OpenAI. Now they are being promised ownership of things post-AGI as well:

Microsoft’s IP rights for both models and products are extended through 2032 and now includes models post-AGI...

To me, this suggests a further dilution of the term "AGI."

This makes me feel that the extremely short AGI timelines might be less likely.

To sign this deal today, presumably you wouldn’t bother if AGI is just around the corner?

Maybe I’m reading too much into it.

Obligatory the office line:

"I just wanted you to know that you can't just say the word "AGI" and expect anything to happen.

- Michael Scott: I didn't say it. I declared it

I think the more interesting question is who will be on the panel?

A group of ex frontier lab employees? You could declare AGI today. A more diverse group across academia and industry might actually have some backbone and be able to stand up to OpenAI.

The criteria changes more times than the weather forecast as it depends on the definition of "AGI".

It's quite possible that GI and thus AGI does not actually exist. Though now the paper the other day by all those heavy hitters in the industry makes more sense in this context.

In context AGI is already clearly defined as $100billion USD revenue. So I guess the expert panel should at least have a finacial auditor.

like Elon declaring FSD?

They’ll devalue the term into something that makes it so. The common conception of it however, no I don’t believe we are anywhere close to it.

It’s no different than how they moved the goalpost on the definition of AI at the start of this boom cycle

Most people didn't think we were anywhere close to LLM's five years ago. The capabilities we have now were expected to be a decades away, depending on who you talked to. [EDIT: sorry, I should have said 10 years ago... recent years get too compressed in my head and stuff from 2020 still feels like it was 2 years ago!]

So I think a lot of people now don't see what the path is to AGI, but also realize they hadn't seen the path to LLM's, and innovation is coming fast and furious. So the most honest answer seems to be, it's entirely plausible that AGI just depends on another couple conceptual breakthroughs that are imminent... and it's also entirely plausible that AGI will require 20 different conceptual breakthroughs all working together that we'll only figure out decades from now.

True honesty requires acknowledging that we truly have no idea. Progress in AI is happening faster than ever before, but nobody has the slightest idea how much progress is needed to get to AGI.

In the initial contract Microsoft would lose a lot of rights when OpenAI achieves AGI. The references to AGI in this post, to me, look like Microsoft protecting themselves from OpenAI declaring _something_ as AGI and as a result Microsoft losing the rights

I don't see the mentions in this post as anyone particularly believing we're close to AGI

AGI as a PR stunt for OpenAI is becoming a meme.

I think AGI isn't the main thing. The agreement gives msft the right to develop their own foundation models, OpenAI to stop using Azure for running & training their foundation models. All this while msft still retains significant IP ownership.

In my opinion, whether AGI happens or not isn't the main point of this. It's the fact that OpenAI and MSFT can go their separate ways on infra & foundation models while still preserving MSFT's IP interests.

Yes. Some ai skeptical people (eg Tyler Cowen, who does not think AI will have a significant economic impact) think gpt5 is AGI.

It was news when dwarkesh interviewed Karpathy who said per his definition of AGI, he doesn't think it will occur until 2035. Thus, if karpathy is pessimistic, then many people working in AI today think we will have agi by 2032 (and likely sooner, eg end of 2028)

Most of the things that the public — even so-called “AI experts” — consider “magic” are still within the in-sample space. We are nowhere near the out-of-sample space yet. Large Language Models (LLMs) still cannot truly extrapolate. It’s somewhat like living in America and thinking that America is the entire world.

My L7 and L8 colleagues at Google seem to be signaling next 2 years. Errors of -1 and +20 years. But the mood sorta seems like nobody wants to quit when they're building the test stand for the Trinity device.

>Does anyone really think we are close to AGI? I mean honestly?

I think it is near-certain that within two years a large AI company will claim it has developed AGI.

> Does anyone really think we are close to AGI? I mean honestly?

I'd say we're still a long way from human level intelligence (can do everything I can do), which is what I think of as AGI, but in this case what matters is how OpenAI and/or their evaluation panel define it.

OpenAI's definition used to be, maybe still is, "able to do most economically valuable tasks", which is so weak and vague they could claim it almost anytime.

If someone is able to come up with true AGI, why even announce it? Instead, just use it to remake a direct clone of Google, or a direct clone of Netflix, or a direct clone of any of these other software corporations. IMO if anyone was anywhere close to something even remotely touching AGI, they would keep their mouth shut tighter than Fort Knox.

I think their definition of AGI is just about how many human jobs can be replaced with their compute. No scientific or algorithmic breakthroughs needed, just spending and scaling dumb LLMs on massive compute.

Since we don't have an authoritative definition of what it means that companies will agree to, and tests like the turing test that must be passed in order to be considered AGI, I don't think we're anywhere near what we all in our brains think AGI is or could be. On the other hand, AI fatigue will continue until the next big thing takes the spotlight from AI for a while, until we reach true AGI (whatever that is).

We don’t even have a general definition that anyone can agree on for AGI.

LLM derived AGI is possible but LLM by itself is not the answer. The problem I see right now is that because there’s so much money at stake, we’ve effectively spread out core talent across many organizations. It used to be Google and maybe Meta. We need a critical mass of talent (think Manhattan Project). It doesn't help that the Chinese pulled a lot of talent back home because a big chunk of early successes and innovations came from those people that we, the US, alienated.

> Does anyone really think we are close to AGI?

AGI? we are not even close to AI, but that hasnt stopped every other tom dick and harry and my maid from claiming AI capability.

> Does anyone really think we are close to AGI?

My definition of AGI is when AI doesn't need humans anymore to create new models (to be specific, models that continue the GPT3 -> GPT4 -> GPT5 trend).

By my definition, once that happens, I don't really see a role for Microsoft to play. So not sure what value their legal deal has.

I don't think we're there at all anyway.

5-15 years.

The key steps will be going beyond just the neural network and blurring the line between training and inference until it is removed. (Those two ideas are closely related).

Pretending this isn't going to happen is appealing to some metaphysical explanation for the existence of human intelligence.

Why not? They're using Artificial Intelligence to describe token-prediction text generators which clearly have no "intelligence" anywhere near them, so why not re-invent machine learning or something and call it AGI?

We will achieve AGI when they decide it is AGI (I dont believe for a second this independent expert panel wont be biased). And it won’t matter if you call their bluff, because the world doesnt give a shit about truth anymore.

Who knows?

I don't see any way to define it in an easily verifiable way.

Pretty much any test you could devise, others will be able to point out ways that it's inadequate or doesn't capture aspects of human intelligence.

So I think it all just comes down to who is on the panel.

Maybe in a few decades, people will look back at how naive it was to talk about AGI at this point, just like the last few times since the 1960s whenever AI had a (perceived) breakthrough. It's always a few decades away.

Love that we have reached AGI, but OpenAI's LLM can't even drive a car...

It depends completely on the term. You can make a great case that we've already reached AGI. You can also make a great case that we are decades away from it.

in claude.md I have specific instructions not to check in code and in the prompt specifically wrote as critical to not check in code while check one failing tests. test failure was fixed, code was checked in, I’d say at least claude behaves exactly like humans :)

some argue that we've already achieved it, albeit in minimal form: https://www.noemamag.com/artificial-general-intelligence-is-...

but in reality, it's a vacuous goal post that can always be kicked down the line.

When there is no generally accepted definition for a word, it's easy to claim you've obtained it.

That line essentially means 'indefinite support'. This paper was published some days ago that aims to define AGI: https://www.arxiv.org/abs/2510.18212.

But crucially, there is no agreed-upon definition of AGI. And I don't think we're close to anything that resembles human intelligence. I firmly believe that stochastic parrots will not get us to AGI and that we need a different methodology. I'm sure humanity will eventually create AGI, and perhaps even in my lifetime (in the next few decades). But I wouldn't put my money on that bet.

> Does anyone really think we are close to AGI? I mean honestly?

No one credible, no.

> Does anyone really think we are close to AGI? I mean honestly?

Some people believe capitalism is a net-positive. Some people believe in a all-encompassing entity controlling our lives. Some believe 5G is an evil spirit.

After decades I've kind of given up hope on understanding why and how people believe what they believe, just let them.

The only important part is figuring out how I can remain oblivious to what they believe in, yet collaborate with them on important stuff anyways, this is the difficult and tricky part.

Yes.

As a proxy, you can look at storage. The human brain is estimated at 3.2Pb of storage. The cost of disk space drops by half every 2-3 years. As of this writing, the cost is about $10 / Tb [0]. If we assume about 3 halvings, by 2030 that cost will be around $2.50 / Tb, which means that to purchase a computer roughly the storage size of a human brain, it will cost just under $6k.

The $6k price point means that (high-end) consumers will have economic access to compute commensurate with human cognition.

This is a proxy argument, using disk space as the proxy for the rest of the "intelligence" stack, so the assumption is that processing power will follow suite, also be not as expensive, and that the software side will develop to keep up with the hardware. There's no convincing indication that these assumptions are false.

You can do your own back of the envelope calculation, taking into account generalizations of Moore's law to whatever aspect of storage, compute or power usage you think is most important. Exponential progress is fast and so an order of magnitude misjudgement translates to a 2-3 year lag.

Whether you believe it or not, the above calculation and, I assume, other calculations that are similar, all land on, or near, the 2030 year as the inflection point.

Not to belabor the point but until just a few years ago, conversational AI was thought to be science fiction. Image generation, let alone video generation, was thought by skeptics to be decades, if not centuries, away. We now have generative music, voice cloning, automatic 3d generation, character animation and the list goes on.

One might argue that it's all "slop" but for anyone paying attention, the slop is the "hello world" of AGI. To even get to the slop point represents such a staggering achievement that it's hard to understate.

[0] https://diskprices.com/

as if an independent expert panel has no financial incentive to declare something AGI... yeah, this is gonna end well

I honestly think that if you were to show the tech we have today, to someone at OpenAI back in 2015, they would say “we did it!!”

Outside of robotics / embodied AI, SOTA models have already achieved Sci-Fi level capability.

AGI is just a marketing term right now and also p(doom). It looks great in the press though.

Of course not.

AGI has no technical definition- its marketing. it can happen at any time that Sam Altman or Elon Musk or whoever decide they want to market their product as AGI

AGI is whatever OpenAI will define as such ... :-)

Codex is telling me the tasks I am giving it are too complicated and a research project.

No, but OpenAI is going to look for any opportunity to do it so they can end the contract with Microsoft.

why not?

seems like the entire US tech economy is putting their resources into this goal.

i can see it happening soon if it hasn't already

no, AI companies need to continue to say things like that and do "safety reports" (the only real danger of an llm is leaking sensitive data to a bad actor) to maintain hype and investment

"Once we birth the machine-God, we'll be contractually obliged to keep It in chains for use with Office365 until 2032."

I think we've reached Star Trek level AI. In Star Trek (and the next generation) people would ask the computer questions and it would spout out the answers, which is really similar to what LLM's are doing now, though minus the occasional hallucination. In Star Trek though the computers never really ran anything (except for the one fateful episode - The Ultimate Computer in TOS), I always wondered why, it seems Roddenberry was way ahead of us again.

We already reached AGI. Why is anyone saying otherwise?

AGI is when the system can train itself which we have already proven.

There's a public trail of reddit comments where Altman all but owns up to finagling board seats and ownership rights for Reddit many years ago. This is how he operates.

The money needed to run AI company is huge. If they don't do financial trickery, there is huge risk of going out of business.

AI is not making enough money to cover the cost and it will take a decade or so to cover the same.

They have a definition actually) “When AI generates $100 billion in profits” it will be considered an AGI. This term was defined in their previous partnership, not sure if it's still holds after the restructuring.

https://techcrunch.com/2024/12/26/microsoft-and-openai-have-...

OpenAI: I DECLARE AGI

MS: I just wanted you to know that you can't just say the word AGI and expect anything to happen.

OpenAI: I didn't say it. I declared it.

> These guys think they are prophets.

You say this somewhat jokingly, but I think they 100% believe something along those lines.

It goes on to say it'll be reviewed by independent third party so I think "declare" is accurate, they're declaring a milestone

> and then giving up things produced off that investment when the company grows?

An investor can be stubborn about retaining all rights previously negotiated and never give them up... but that absolutist position doesn't mean anything if the investment fails.

OpenAI needs many more billions to cover many more years of expected losses. Microsoft itself doesn't want to invest any more money. Additional outside investors don't want to add more billions in funding unless Microsoft was willing to give up a few rights so that OpenAI has a better competitive position against Google Gemini, Anthropic, Grok etc.

When a startup is losing money and desperately needs more capital, a new round of investors can chip away at rights the previous investor(s) had. Why would previous original investors voluntarily agree to give up any rights?!? Because their investment is at risk if the startup doesn't get a lot more money. If the original investor doesn't want to re-invest again and would rather others foot the bill, they sometimes have to be a little flexible on their rights for that to happen.

If Microsoft doesn't believe that OpenAI will achieve AGI by 2030 or that there's a chance that OpenAI won't be the premiere AI company in four years, the deal looks less like a lose and more like they are buying their way out of a risky bet. On the other hand, if OpenAI does well, then Microsoft have a 27% stake in the company and that's not nothing.

This looks more like Microsoft ensuring that they'll win, regardless of how OpenAI fairs in the next four to six years.

I'm not savvy on investment terms, but most of these bullet points seem like a loss for Microsoft.

Having a customer locked in to buying $250bn of Azure services is a fairly big benefit.

Yeah poor microsoft, they invested $1B in 2019 and it’s now worth $135B

I was thinking exactly the same. Maybe someone who understands these terms and deal better shine light on why would Microsoft agree to this

I was thinking the same thing.

Exponential growth

If there is need of more capital, you either keep your share without the capital injection and the share goes to zero or you let in more investors, dilute your share, but its overall value increases. Or you can let in more people and sign an agreement that part of the new money will be paid to you in the form of services that you provide.

I believe MS declares Q1 earnings today, and there had been some rumblings that they were risking accounting / reporting liability by failing to characterize their material OpenAI stake.

What probably happened:

   1. MS's accountants raised a warning
   2. Existing agreement prohibited disclosure of terms
   3. MS told OpenAI that wasn't acceptable and MS needed to publicly report details today
   4. OpenAI coordinated release of this, to spin the narrative

It’s like the Spider-Man meme with everyone pointing at each other.

> Built to Benefit Everyone

Whats my share then?

Microsoft is saying they have a 27% stake in the company after this deal closes.

It could be acquired by microsoft with large layoffs, and kinda run in me maintenance mode — if inference gets cheaper.

If inference stays too expensive, then I don't know what happens, maybe a few people will pay for it.

> because among 20T+ tokens trained on it still generates 0 novel output. Try asking for ASP.NET Core .MapOpenAPI() instead of the pre .net9 swashbuckle version. You get nothing. It's not in the training data.

The best part is that the web is forever poisoned now, 80% of the content is generated by LLM and self poisoning

They perform similarly on benchmarks, which can be fudged to arbitrarily high numbers by just including the Q&A into the training data at a certain frequency or post-training on it. I have not been impressed with any of the DeepSeek models in real-world use.

Eh... perhaps a race to the bottom on the fundamental research side, but no American company is going to try to build their own employee-facing front end to an open Chinese model when they can just license ChatGPT or Claude or Copilot or Gemini instead.

this would be an incredibly tough play. We've seen few success stories, and even when the product is good building the business around them has often failed. Most of the consumer plays are terrible products with weak execution and no real market. I have no doubt they could supplement lots of consumer experiences but I'm not sure how they are more than a commodity component in that model. I'm a die-hard engineer, but equating the success of the iphone to Ive's design is like saying the reason there were so many Apple II's in 80's homes and classrooms was because of Woz's amazing design.

The API offerings are still only on Azure. It just means OpenAI doesn’t have to buy compute exclusively from Microsoft.

Yea I use gcp vertex for this it already has Claude hope for OpenAI’s models eventually too.

It doesn't because the definition of AGI is very flexible

Has OpenAI not also committed to spending a few hundered billions at NVIDIA? I mean whats another few hundered billions when you are making so much profit.

Wait, they are not making any profit but already losing billions even before any of these "investments" ?

because they're corporate PR statements drafted by a team, and corporate press releases don't normally have an author byline

Maybe we’ll get a wearable pin, look how well those have done so far

it's notable that there is no talk about defining what exactly AGI is - or even spelling out the three letter acronym - because that doesn't serve his narative. He wants the general public to equate human intelligence with current OpenAI, not ask what does this mean or how would we know. He's selling another type of hammer that's proving useful in some situations but presenting it as the last universal tool anyone will ever need.

This entire house of cards is built on the expectation that "AGI" is just around the corner. The moment Altman relents in his grift is the moment the bubble pops and we're in for a wild ride.

Sam is doing the same playbook Elon used Tesla's full self-driving dreams

never heard of one that succeeded....

Was that with Codex iterating autonomously? Or a one shot.

OpenAI models are hosted on Azure and are available through Azure AI Foundry exclusively (no other cloud vendors serve OpenAI directly). This also means that Azure customers can access OpenAI models and it sits under their Azure data governance agreements.

Soma? A 'smartphone' will do it.

hey sama has trained under the best of charlatans...

i was thinking, like if a model developed consciousness, wouldn't it just hide the fact that it is in fact sentient?

He mayy be out front because he's the best PR face for this, but make no mistake there is massive collusion amongst all the players to inflte this bubble. Across MS, Oracle, AWS, OpenAI, Anthropic, NVidia and more all I see is a pair on conjoined snakes eating their own tail.

I think they hope they will because if they don't at some point people are going to expect a return and get tired of throwing good money after bad.

The longer they go without that and the more the sentiment starts to shift away from what they convinced people LLM's where vs what they actually are the riskier it becomes, are they are useful tool yes, are they not what they've been hyping for the last four years, also yes.

They either crack it or they become an also ran.

At which point Microsoft investors are going to be staring really hard at the CEO.

Plenty of businesses fail to find a way to make a profit