Amazon completes $50bn investment in OpenAI for about 5% stake

In short: Amazon has completed a $50 billion investment in OpenAI, ending up with an estimated 5 percent ownership stake.

What happened

Amazon has finished investing a total of $50bn in OpenAI, the company behind ChatGPT. The Financial Times reports this gives Amazon roughly a 5 percent stake in OpenAI.

Amazon first invested $15bn in February as part of a wider business partnership. At the time, Amazon said it would invest another $35bn if certain goals were met, including OpenAI going public (listing shares on a stock market) or reaching a major AI breakthrough.

According to disclosures in Amazon’s financial results, it invested the full amount anyway, even though those conditions were not met. The final portion of the money was delivered this week, according to a person familiar with the deal.

The investment also tightens the business relationship between the two companies. It adds to existing agreements around cloud services, chips, and other computing resources. Cloud computing is basically renting powerful computers over the internet (like renting a fleet of delivery vans only when you need them).

The report says Amazon agreed to complete the full investment after OpenAI renegotiated its contract with Microsoft in April. That change opened the door for other cloud providers, including Amazon Web Services, to support OpenAI.

Why it matters

Training modern AI systems costs a lot of money and requires huge amounts of computing power. This deal gives OpenAI more funding for that work, and it gives Amazon a bigger role in supplying the rented computing that makes AI products possible.

Source: Financial Times