Microsoft Corp is in talks to invest $10 billion into OpenAI, the owner of ChatGPT, which will value the San Francisco-based firm at $29bn, 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 $29bn 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 per cent 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 49pc stake in OpenAI, with other investors taking another 49pc and OpenAI’s nonprofit parent getting 2pc, the report said, without clarifying what the stakes would be until Microsoft got its money back.

Microsoft, which invested $1bn 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.

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Gaza’s horror
Updated 21 May, 2025

Gaza’s horror

The quickest way to stop the bloodshed would be for the US to immediately halt all military and financial aid to Israel.
Climate planning
21 May, 2025

Climate planning

ALTHOUGH the effects of climate change manifest themselves throughout the year, they seem particularly more...
Failed auction
21 May, 2025

Failed auction

THE poor response to the government’s bid to sell three redundant thermal power plants indicates the investors’...
Drawdown
Updated 20 May, 2025

Drawdown

There is a strong incentive for reinforcing the military drawdown with some soft measures.
Unusual benchmarks
20 May, 2025

Unusual benchmarks

THE IMF has slapped Pakistan with several ‘new’ structural benchmarks — some of them quite unusual — under...
Celebrating Sirbaz
20 May, 2025

Celebrating Sirbaz

SIRBAZ Khan has achieved what no other Pakistani has before him. The scale of his accomplishment also makes him one...