When Elon Musk invested heavily in founding OpenAI in late 2015, he wanted to create another AI company to prevent Google from dominating this important field.
A lot has changed since then, but the reason OpenAI exists remains the same. Google has been working toward this AI moment for more than 25 years. And that’s a beast to beat.
Take a look at the companies behind OpenAI, which raised a record $110 billion on Friday.
OpenAI’s largest corporate investor is a fierce rival of Google, and stands to gain big if OpenAI can seriously challenge Google in the battle for AI supremacy and control of the flow of digital information in this new era.
The way I see it, it has become “everyone against Google.” The breakdown is as follows:
Amazon is Google’s biggest cloud rival
New big kahuna. Amazon is investing $50 billion in OpenAI.
Amazon competes with Google in cloud computing. AI workloads are a big new growth engine in this space, and Google is growing rapidly.
Amazon also rivals Google in one of the most valuable parts of the online search business: product search. While Google is weaving AI throughout its search services, Amazon is lagging behind in this area.
Google has been designing AI chips called TPUs (Tensor Processing Units) for about 10 years. Amazon has a similar product called Trainium, which is also a big field of competition.
Amazon’s $50 billion investment in OpenAI comes with several perks that will help it fight Google.
Amazon Web Services will serve as the exclusive third-party cloud distributor for OpenAI’s Frontier business products and co-develop custom AI models for Amazon’s applications.
OpenAI will also significantly leverage Trainium’s computing power to support advanced AI workloads and expand business access to its models through AWS’s cloud infrastructure.
Nvidia competes with Google’s AI chips
Nvidia has agreed to invest $30 billion in OpenAI in this latest round.
Nvidia is the clear leader in AI chips with GPUs. But Google TPUs have become popular these days, and many of Nvidia’s biggest customers have also agreed to rent or buy TPUs. If TPUs really take off, this could eat into Nvidia’s market share and slow its growth.
With the new investment, Nvidia also has new perks to protect against the Google threat.
OpenAI is deepening its partnership with Nvidia by using massive new computing power to improve the training and execution of cutting-edge AI models.
This new agreement focuses specifically on Nvidia’s upcoming Vera Rubin systems, which will significantly increase the computing power available to run OpenAI models after training. This is known as inference and is becoming the most important part of the AI chip wars.
Microsoft still owns the majority of OpenAI
Although Microsoft did not invest in this round, it has been OpenAI’s largest investor for years. Even after skipping this round, Microsoft probably already owns more than 20% of OpenAI and has a large cloud computing deal with the startup.
Microsoft is Google’s old nemesis. Before Google rose to power and took the web by storm in the early 2000s, Microsoft ruled the technology world.
These days, Microsoft competes with Google in almost every area of its business, including cloud computing, business software, and search. (Bing lags far behind Google in search market share, but still generates significant revenue for Microsoft.)
Microsoft CEO Satya Nadella is still trying to get Google to dance, and OpenAI is the key.
Friday’s new OpenAI funding round does not change Microsoft’s existing agreement with OpenAI, including how revenue is shared, how intellectual property is handled, what defines advanced AI, and Microsoft’s exclusive rights to provide certain services.
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