The new company will pivot from building a personalized AI chatbot named Pi to becoming an AI studio that helps other companies work with large language model AI. The deal provides a soft landing for Gates and Microsoft board member Reid Hoffman's VC firm, Greylock, for their AI venture. Despite potential regulatory scrutiny and internal conflicts with OpenAI, Microsoft sees the acquisition as a strategic move to secure its AI ambitions.
Key takeaways:
- Microsoft is reportedly paying approximately $650 million to Inflection AI, including $620 million for non-exclusive licensing fees for the technology and $30 million for Inflection to agree not to sue over Microsoft’s poaching.
- Investors in Inflection AI, including Microsoft co-founder Bill Gates and former Google CEO Eric Schmidt, will reportedly have a good outcome from the deal, with early investors getting 1.5 times their investment and later investors getting 1.1 times their investment.
- Inflection AI, which was founded in 2022 and raised more than a billion at a $4 billion valuation, will pivot from building a personalized AI chatbot to becoming an AI studio helping other companies work with large language model AI.
- Despite close ties with OpenAI, Microsoft is looking for a backup for its AI strategy due to potential FTC mandates, reported tensions between Microsoft’s engineers and OpenAI’s engineers, and other issues with OpenAI.