Apple reportedly backs out of OpenAI funding round amid investor uncertainty
Apple has reportedly stepped back from talks to participate in an OpenAI funding round expected to raise as much as $6.5 billion. According to sources cited by the Wall Street Journal, the tech giant fell out of the talks to join the round, which is slated to close next week.
Other tech companies such as Microsoft and NVIDIA are reportedly in discussions to contribute to the funding effort. Microsoft has already invested nearly $13 billion in OpenAI and is rumored to be considering an additional $1 billion investment.
Venture capital firm Thrive Capital is leading the round with an investment of approximately $1 billion. Investment firm Tiger Global Management and UAE state-backed company MGX are also in discussions to participate.
In June, ReadWrite reported that the the iPhone-maker was planning to integrate ChatGPT into Siri, forming “Apple Intelligence,” but would not offer any money for it. At the time, sources said: “Instead, Apple believes pushing OpenAI’s brand and technology to hundreds of millions of its devices is of equal or greater value than monetary payments.” Tech analysts criticized Apple’s decision at the time, calling the deal “weak” on X.
Oh my god, the Apple/OpenAI deal is so weak. Apple paid them nothing, and as @markgurman reports, it could end up costing OpenAI a ton of money if people actually use it at scale. Apple even takes a cut if people subscribe to ChatGPT Plus. Amazing stuff! Great company! https://t.co/qHoWoYQKc1 pic.twitter.com/wA50kv5dlz
— Ed Zitron (@edzitron) June 13, 2024
By August, Apple was reportedly considering investing in OpenAI, potentially raising the AI firm’s valuation to over $100 billion, however, it appears they have made a U-turn on this decision.
Could OpenAI’s for-profit move be making investors nervous?
OpenAI recently announced plans to transition into a for-profit corporation, a move that could reduce the non-profit’s control and attract a wider range of investors.
The non-profit arm is expected to maintain a minority stake in the new for-profit entity. CEO Sam Altman is likely to receive equity in the for-profit division, potentially valued at $150 billion following the restructuring, as the company considers lifting the cap on investor returns.
The proposed restructuring is still under review, involving legal and shareholder consultations, with no clear timeline for completion.
Amid these strategic changes, recent departures from the C-suite have added uncertainty to OpenAI’s future direction.
ReadWrite has reached out to Apple for comment.
Featured image: Canva / Ideogram
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