OpenAI may have lost Apple as potential investor, will continue as partners

Apple has withdrawn from negotiations to join OpenAI's latest funding round, which aims to raise $6.5 billion, The Wall Street Journal reported. Although, the continue to be partners, as Apple fuses ChatGPT into Siri.

The funding round, set to close next week, could value the artificial intelligence startup at $150 billion. Despite Apple's exit, other tech giants remain involved. According to the Journal, Microsoft is expected to invest around $1 billion, adding to its existing $13 billion investment in OpenAI. Nvidia is also in talks to participate.

Venture capital firm Thrive Capital is leading the round with a planned $1 billion investment. Other potential investors include Tiger Global Management and United Arab Emirates state-backed company MGX, sources familiar with the matter told the Journal.

OpenAI, the company behind ChatGPT, is simultaneously undergoing a major restructuring from a nonprofit to a for-profit entity. This transition must be completed within two years, or investors will have the right to request their money back, the Journal reported.

The funding comes at a crucial time for OpenAI, which faces soaring costs and financial strain. Reports are that the company's annual spending on AI training and inference is projected to reach $7 billion, significantly exceeding its expected revenue.

Meanwhile, OpenAI is experiencing a shake-up in its leadership. Three top executives, including Chief Technology Officer Mira Murati, announced their departures on Wednesday, according to Reuters. This follows earlier exits by co-founders Ilya Sutskever and John Schulman.

The concentration of power in AI development has drawn regulatory scrutiny. Both US and EU officials have expressed concerns about Nvidia's dominance in AI chips and Microsoft's close relationship with OpenAI, Bloomberg reported. So, Apple's decision to step back from this investment could be a more cautious approach to avoid scrutiny.

Although, the partnership between the two companies seem to remain intact. Apple is set to integrate ChatGPT, OpenAI's flagship language model, into its new AI features across its devices. Interestingly, this integration comes without a direct financial transaction – Apple isn't paying OpenAI for the use of ChatGPT.