Apple Reportedly Exits OpenAI's $6.5 Billion Funding Round

Apple Reportedly Exits OpenAI's $6.5 Billion Funding Round | PYMNTS.com

That round is expected to raise up to $6.5 billion, but Apple recently backed away from discussions to take part, The Wall Street Journal (WSJ) reported Friday (Sept. 27), citing sources close to the matter. Those sources say Microsoft and Nvidia are also in discussions to take part in the round, with the former company expected to invest $1 billion in the artificial intelligence (AI) startup, on top of the $13 billion it has already invested. The report noted that Apple's participation would have marked a rare investment by the company in another major tech firm. As PYMNTS wrote last week, OpenAI's fundraising plan -- which would reportedly value the company at $150 billion -- could usher in a new era for AI commercialization, potentially reshaping entire industries and leading to a pitched battle for market dominance. The updated valuation, which doesn't include the money being raised, marks a jump from the $86 billion figure established during OpenAI's tender offer earlier in the year. If successful, this financing round would seal OpenAI's status as one of the world's most valuable startups and bring about a seismic shift in the AI sector. "We're seeing a consolidation of capital around clear winners in the general LLM [large language model] space -- OpenAI, Perplexity, Mistral, LLaMA," Hannah Chelkowski, co-founder and general partner at Blank Ventures, told PYMNTS. "This funding round further cements OpenAI's position as a leader in this space." The commercial implications could be wide ranging, with businesses in a number of different industries scrambling to add advanced AI capabilities to their operations. "Companies successfully leveraging OpenAI's technology may gain substantial competitive advantages, potentially disrupting traditional business models and reshaping entire markets," PYMNTS wrote. "Observers say the AI fundraising effort could trigger a surge in AI-powered products and services across a range of sectors." Retailers could deploy more sophisticated chatbots and personalized shopping experiences, financial institutions could improve fraud detection and algorithmic trading, and healthcare providers might employ AI for more accurate diagnostics and treatment plans. And competition among AI infrastructure firms is likely to heat up. "OpenAI sits within a unique category in the AI industry -- the category of companies building the basic infrastructure of AI," Asaf Charnilas, an investor at Team8, told PYMNTS, suggesting that other players in this space could need to secure larger funding rounds to keep up.

Apple reportedly backs out of OpenAI funding round

Apple and OpenAI are going through rough times. Credit: Getty Images / Bucsa Nicolae In a short-lived will-they-won't-they love story to rival the likes of Heathcliff and Catherine, Apple is reportedly no longer in talks with ChatGPT creator OpenAI for investing in its latest fundraising round. The Washington Post reported on Friday that a "knowledgeable person" reported that Apple fell out of talks to join this round. It's a surprise because the news came at such a late hour -- the talks are scheduled to wrap up this upcoming week -- but shouldn't shock anyone too intensely. Apple rarely invests in another Silicon Valley company, and is known for being pretty conservative in the world of direct investments and acquisitions in comparison to other tech giants. Microsoft and Nvidia are still holding strong in their hopes to invest in OpenAI. According to the Washington Post, Microsoft is expected to invest $1 billion in addition to the $13 billion its already invested into OpenAI, which has helped Microsoft gain access to OpenAI's Large Language Models and boost its own AI productivity tools. Thrive Capital, a venture-capital firm, is expected to put in around $1 billion and Tiger Global Management and MGX are also in talks. Of course, it isn't over until it's over, and we could still see new players over the next few days. And, lest we forget, this doesn't mean Apple and OpenAI are no longer thick as thieves. Apple announced its partnership with OpenAI at its WWDC event in June, which will integrate ChatGPT features into the iOS 18 update. As Apple Senior VP Craig Federighi said in the announcement, it's "AI for the rest of us."

Tim Cook-Led Apple Reportedly Abandons OpenAI Funding Round Discussions, But Nvidia And Microsoft Could Still Invest In ChatGPT-Parent - Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL)

Apple Inc. AAPL has reportedly decided to withdraw from negotiations to invest in OpenAI's funding round, which is projected to raise between $6.5 billion and $7 billion. What Happened: Apple's decision to pull out of the talks was made at the last minute. The funding round, spearheaded by venture capital firm Thrive Capital, is due to close next week, reported The Wall Street Journal, citing a person with knowledge of the matter. Microsoft Corp. MSFT and Nvidia Corp. NVDA are still in talks to join the round, with the former expected to contribute around $1 billion, adding to its existing $13 billion investment in the company. See Also: OpenAI CTO Mira Murati Steps Down: 'I Want To Create The Time And Space To Do My Own Exploration...' Investment firm Tiger Global Management and UAE state-backed company MGX are also reportedly considering participation. Earlier this month, it was reported that OpenAI is in the process of transitioning from a nonprofit to a for-profit entity, a move encouraged by many investors in the round. This transition is expected to be a complex process for the startup. If the transition is not completed within two years, investors in the current round will have the right to request their money back. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: OpenAI's transition to a for-profit model has also been a contentious issue. Tesla and SpaceX CEO Elon Musk, who co-founded OpenAI in 2015 and left in 2018, has previously questioned the legality of this shift. Earlier this year, Musk also criticized Apple's partnership with OpenAI due to concerns about data security and privacy. Apple had announced its collaboration with OpenAI to incorporate ChatGPT into its operating systems, which led to Musk threatening to ban the Tim Cook-led company's devices from his ventures including Tesla. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: iOS 18 Includes Apple's New Passwords App with End-to-End Encryption: Here's How You Use It Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Apple Market News and Data brought to you by Benzinga APIs

Apple not investing in OpenAI after all, new report says - 9to5Mac

Apple is no longer planning to invest in OpenAI, according to a new report from The Wall Street Journal. This comes as OpenAI plans to close a $6.5 billion funding round next week, with investments possible from both Microsoft and Nvidia. Today's report says: Apple is no longer in talks to participate in an OpenAI funding round expected to raise as much as $6.5 billion, an 11th hour end to what would have been a rare investment by the iPhone maker in another major Silicon Valley company. Apple recently fell out of the talks to join the round, which is slated to close next week, according to a knowledgeable person. Apple was first reported to be discussing an OpenAI investment last month. It was never clear, however, how much Apple might've invested in the company. Microsoft, of course, is already a major investor in OpenAI and owns a 49% share of its profits. Today's report suggests Microsoft is set to expand its OpenAI investment with another $1 billion through this latest round. The news of Apple's decision to pass on investing in OpenAI comes amid more leadership and structural changes at the company. Former Apple design chief Jony Ive also recently confirmed that he is working with OpenAI to design an AI hardware product. Apple and OpenAI are teaming up to integrate ChatGPT into iOS 18 later this year. Through this partnership, ChatGPT will handle world knowledge requests in combination with Siri. Bloomberg has reported that Apple is not paying OpenAI as part of this partnership, nor is OpenAI paying Apple. Instead, Apple reportedly believes that the exposure the iOS 18 integration is giving OpenAI is "of equal or greater value" than cash.