OpenAI has announced a $40 billion funding round, but according to a report, it must convert to a for-profit company by 2025’s end in order to secure the full amount. Photo Credit: Levart_Photographer
Another day, another massive AI funding round – this time from OpenAI, which has announced a staggering $40 billion raise at a $300 billion post-cash valuation.
The ChatGPT developer disclosed its newest round, reportedly the largest raise secured by any startup to date, in a brief message. Spanning less than 100 words and lacking quotes from higher-ups, said message doesn’t contain an abundance of supplemental information.
But OpenAI did touch on broad goals of using the capital “to push the frontiers of AI research even further” and to “deliver increasingly powerful tools” to users. Additionally, the AI giant underscored its excitement “to be working in partnership with SoftBank Group.”
Beyond this concise breakdown, outlets including the Wall Street Journal have indicated that there are strings attached to SoftBank’s support. (All told, the latter could amount to $30 billion; different parties are expected to kick in $10 billion.)
Most significantly, the Tokyo-headquartered company can “pare back” the raise to $20 billion if OpenAI fails to restructure into a for-profit company by 2025’s end, per the Journal.
As for SoftBank’s debt-bankrolled contribution, the Stargate stakeholder is expected to forward $10 billion worth of borrowed capital to OpenAI in April; assuming OpenAI realizes its privatization goal, the remaining $30 billion is tentatively set to arrive before early 2026.
To reiterate the obvious, despite already boasting impressive tools, generative AI is still in its relative infancy.
And only time will tell whether the current market leaders maintain their positioning in the long term. Unprecedented nature aside, AI is also facing pressing questions about ever-elusive profitability.
Nevertheless, between OpenAI’s just-revealed raise and xAI’s X combination alone, it probably goes without saying that there’s no shortage of capital flying around the space.
That’s definitely important for rightsholders in (and well beyond) the music world, which are still litigating against leading AI players for allegedly training their models on protected works without permission.
OpenAI in particular has been accused of multiple copyright-law violations; GEMA is spearheading a related lawsuit in Germany. In the bigger picture, besides these key complaints, high-stakes discussions are ongoing in the States and the U.K. about AI training laws themselves.
Then there are the training practices of AI companies based in countries with less robust IP protections.
Far from hesitant to ingest data (including from rival companies) en masse, those operations are unlikely to cough up material rightsholder compensation. Perhaps more urgently, their outputs and capabilities look to be improving rapidly.
Content shared from www.digitalmusicnews.com.