[danpalmer]

I think this is good for Microsoft, but less good for OpenAI.

Microsoft owns the customer relationship, owns the product experience, and in many ways owns the productionisation of a model into a useful feature. They also happen to own the datacenter side as well.

Because Microsoft is the whole wrapper around OpenAI, they can also negotiate. If they think they can get a better price from Anthropic, Google (in theory), or their own internally created models, then they can pressure OpenAI to reduce prices.

OpenAI doesn't get Microsoft's enterprise legitimacy, Microsoft keep that. OpenAI just gets preferential treatment as a supplier.

On the way up the hype curve it's the folks selling shovels that make all the money, but in a market of mature productionisation at scale, it's those closest to customers who make the money.

[theptip]

$10B of compute credits on a capped profit deal that they can break as soon as they get AGI (i.e. the $10T invention) seems pretty favorable to OpenAI.

[wqaatwt]

I’d be significantly less surprised if OpenAI never made a single $ in profit than if they somehow invented “AGI” (of course nobody has a clue what that even means so maybe there is a chance just because of that..)

[danpalmer]

That's a great deal if they reach AGI, and a terrible deal ($10bn of equity given away for vendor-locked credit) if they don't.

[ArnoVW]

Fortunately for OpenAI the contract states that they get to say when they have invented AGI.

Note: they announced recently that that they will have invented AGI in precisely 1000 days.

[theptip]

Leaving aside the “AGI on paper” point a sibling correctly made, your point shares the same basic structure as noting that any VC investment is a terrible deal if you only 2x your valuation. You might get $0 if there is a multiple on the liquidation preference!

OpenAI are clearly going for the BHAG. You may or may not believe in AGI-soon but they do, and are all in on this bet. So they simply don’t care about the failure case (ie no AGI in the timeframe that they can maintain runway).

[jimbokun]

How so?

Still seems like owning the customer relationship like Microsoft is far more valuable.