Why Microsoft risks big with TikTok in OpenAi

1 August 20248 months babelfish

TikTok pays $20 million a month to access OpenAi's AI models, ending up accounting for a quarter of Microsoft's cloud division's revenue. But the Chinese platform aims to develop its own model and may no longer need American Big Tech. All the details

Until last March, TikTok paid Microsoft nearly $20 million a month to access models from OpenAI , the artificial intelligence company best known for developing ChatGPT and of which Microsoft owns 49 percent. According to revelations from the US newspaper The Information , the sum paid by TikTok was worth almost a quarter of the total turnover of the Redmond company's cloud division.

This is a significant risk: here's why.

TIKTOK'S (AND BYTEDANCE'S) PLANS ON LANGUAGE PATTERNS

Also according to The Information , Microsoft's cloud and artificial intelligence division is on track to reach annual revenue of $1 billion. As mentioned, TikTok currently represents approximately 25 percent of this unit's revenues. But the social network may no longer need to rely on OpenAI and American “Big Tech” if it were to develop its own large language model.

In this regard, already last year The Verge had written that ByteDance – that is, the parent company of TikTok, based in Beijing – was "secretly using" OpenAI technology to develop its own linguistic model: this is a violation of conditions of OpenAI and Microsoft, which prohibit the use of their technologies for the development of "artificial intelligence models that compete with our products and services".

After The Verge article was published, OpenAI suspended ByteDance's account to investigate possible terms of use violations. At the time, ByteDance told CNN that it was using OpenAI's technology "in a very limited way" to develop its own models.

MICROSOFT INVESTMENTS

Microsoft has invested 13 billion dollars in OpenAI, to which it provides computing capacity through the Azure cloud computing platform, and has spent “several hundred million dollars” – reports The Verge – to build a supercomputer dedicated to ChatGPT.

In the fourth fiscal quarter of 2024, Azure revenues grew 29 percent, narrowly missing forecasts (30-31 percent). For the first fiscal quarter of 2025, the company estimates a revenue growth rate of 28-29 percent for the platform.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/tiktok-openai-microsoft/ on Thu, 01 Aug 2024 08:31:21 +0000.