Microsoft Spending Over $50 Billion to Buildout AI Datacenters

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Sam Altman and Greg Brockman are at a new AI subsidiary of Microsoft. Microsoft will spend over $50 billion on AI data centers.

Dave Lee analysis:

1. Sam/Greg form new “AI Research” group in Microsoft. The group has the option to spin off as new company whenever they want. Agreement is that if company is spun off, Microsoft gets 40% of the new company, 60% goes to Sam/Greg and whoever they choose.

2. Sam/Greg don’t spin off the new company immediately because they want to build off of OpenAI IP. Microsoft supposedly has right/access to GPT-4 weights, and since Sam/Greg’s new team would be at Microsoft they’d have access and the right to build off of that. With many OpenAI employees moving over to Microsoft with them, they could continue their work on GPT-5 quite quickly.

Also Microsoft probably agreed to give as much compute power to Sam/Greg as they wanted. So, with the weights, OpenAI’s core team, and vast compute power, this would allow Sam/Greg to barely skip a beat in terms of AGI development.

Then when they’re close to AGI, they spin off the new independent company.

Microsoft gets 40% (or whatever the agreed amount was). Sam/Greg and others split the rest.

End result:
1. Microsoft own large share of AGI, Satya and shareholders happy.
2. Sam and Greg get their own company and they make sure they get the governance they want in that company.
3. This was the best option in Sam/Greg’s view to not just salvage the situation but to flip it. Without this setup and without OpenAI IP, they’d have to start with raising a ton of money, securing compute, and rebuilding three models/data/architecture. This would have put them a few years behind the current trajectory toward AGI. But by joining Microsoft in new setup, they keep most everything in tact. Structure/ownership/governance changes but work continues with mostly same team on top of existing IP, even with same compute clusters.

In summary, Sam/Greg’s deal to join Microsoft is likely not a straightforward acquihire move. No, Sam and Greg (with rest of OpenAI team) have way too much leverage right now to accept that kind of arrangement. Rather, the new agreement is likely one that offers huge benefits and flexibility to Sam/Greg, and it was by far the best option they felt they had on the table. In fact, much more compelling than launching their own company from scratch (w/o access to OpenAI IP).

It’s also an arrangement that can likely calm concerns from OpenAI employees who might join, since Sam/Greg can point to the clause where they can spin off the company as independent any time they choose.

4 thoughts on “Microsoft Spending Over $50 Billion to Buildout AI Datacenters”

  1. So is there any truth to the rumor that Ilya’s AI safety oriented crew staged a coup because of some rumored “large discovery” approximately 2 weeks ago at OpenAI? Did he reach the AGI precipice, looked over into the abyss, and got cold feet?

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