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Apple will not invest in Open AI (1)
The Tech Basic > News > Apple Will Not Invest In OpenAI: Why Did It End Negotiations?
News

Apple Will Not Invest In OpenAI: Why Did It End Negotiations?

Evelyn Blake
Last updated: 1 October 2024 01:46
Evelyn Blake
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Apple will not invest in OpenAI, according to a new report from The Wall Street Journal. The report states that the Cupertino company has abandoned negotiations to participate in the funding round that the startup is using to raise new money for its future.

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The reasons for Apple’s decision not to invest in OpenAI are currently unclear. However, it is important to note that this decision will not affect the integration of ChatGPT with Siri, which is part of the improvements planned for Apple Intelligence in future iOS 18 updates.

There is speculation that recent changes to OpenAI’s management structure, along with plans to restructure the startup into a for-profit organization, may have influenced Apple’s decision not to proceed with the investment.

It’s worth noting that at one point, Apple was set to have a seat on the new OpenAI board of directors. However, shortly after this was announced, both Apple and Microsoft stepped down from their positions as observers. This decision is believed to be related to increasing regulatory scrutiny from the US and the European Union regarding the influence of large tech companies on AI startups.

Apple would be the notable absentee from OpenAI’s new financing round.

Apple will not invest in Open AI (2)

OpenAI’s new investment round is expected to close this week, with several major names participating. Sam Altman’s company plans to raise $6.5 billion, which would give the AI startup an estimated valuation of $150 billion. Investors reportedly include Thrive Capital, Microsoft, NVIDIA, the Emirati fund MGX, and SoftBank, among others.

There has been ongoing discussion about OpenAI’s high expenses in developing ChatGPT and other products, which reportedly exceed the company’s earnings from services and subscriptions. Experts warn that this could lead the startup to bankruptcy within 12 months if it does not secure a significant investment soon.

With or without Apple as a “benefactor,” OpenAI is aiming to build a strong financial cushion to support its restructuring process. The firm is expected to become a charitable corporation, allowing it to operate independently of its current board of directors, while still maintaining its nonprofit arm, which would hold a minority stake.

Amid these changes, the San Francisco-based firm has just lost Mira Murati, one of its key figures. The former CTO unexpectedly announced her departure, following the earlier exit of Ilya Sutskever, co-founder and former chief scientist of OpenAI. Additionally, several researchers and security experts have left, accusing Altman and his team of prioritizing economic profit over the development of safe AI.

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Evelyn Blake
By Evelyn Blake
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Evelyn Blake is an investor in technology and journalist who has been in the nascent space since 2014. Her love and passion for technological innovations made her delve deeper into the world of technology evolution. As a journalist, Evelyn has been covering latest trends and emerging gadgetries. She is a philanthropist and human rights activist.

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