When Elon Musk committed big money to start OpenAI in late 2015, he wanted to create another AI company to stop Google from dominating this important field.
While a lot has changed since then, the reason OpenAI exists still holds: Google has been working toward this AI moment for over 25 years, and it’s the beast to beat.
Take a look at the companies backing OpenAI, which raised a record $110 billion on Friday.
OpenAI’s largest corporate investors are fierce Google rivals that will benefit greatly if OpenAI manages to seriously challenge Google in the battle for AI supremacy and control over how digital information flows in this new era.
It’s become “everyone else against Google,” in my view. Here’s the breakdown:
Amazon is Google’s biggest cloud rival
The new big kahuna. Amazon is investing $50 billion in OpenAI.
Amazon competes with Google in cloud computing. AI workloads have become the big new growth engine for this sector, and Google has been growing quickly.
Amazon also rivals Google in product search, one of the most valuable parts of the online search business. Google has woven AI throughout its search offering, and Amazon is behind in this area.
Google has been designing AI chips called TPUs (Tensor Processing Units) for about a decade. Amazon has a similar offering called Trainium—another huge area of competition.
Amazon’s $50 billion investment in OpenAI gets it several goodies that can help it fight Google.
Amazon Web Services will serve as the exclusive third-party cloud distributor for OpenAI’s Frontier business product, while jointly developing custom AI models for Amazon’s applications.
OpenAI will also use significant Trainium compute capacity to support advanced AI workloads and expand business access to its models via AWS’s cloud infrastructure.
Nvidia competes with Google’s AI chips
Nvidia agreed to invest $30 billion in OpenAI in this latest round.
Nvidia is the clear leader in AI chips, with its GPUs. However, Google TPUs have gained ground recently, with many of Nvidia’s biggest customers also agreeing to either rent or buy TPUs. This could eat into Nvidia’s market share and might slow its growth, if TPUs really catch on.
For its new investment, Nvidia also gets new goodies to help it fend off the Google threat.
OpenAI is deepening its partnership with Nvidia by using massive new computing capacity to better train and run its most advanced AI models.
The new deal specifically centers on Nvidia’s upcoming Vera Rubin systems and significantly increases the computing power available to run OpenAI models after they are trained. This is known as inference, and it’s becoming the most important part of the AI chip wars.
Microsoft still owns a big chunk of OpenAI
Although Microsoft didn’t invest in the latest round, it has been OpenAI’s biggest investor for years. Even after skipping this round, Microsoft likely owns more than 20% of OpenAI already and has a massive cloud-computing deal with the startup.
Microsoft is Google’s original arch-enemy. Microsoft dominated the tech world before Google rose up in the early 2000s and took the web by storm.
These days, Microsoft competes with Google in almost everything it does, including cloud computing, business software, and search. (Bing lags far behind Google in search market share, though it still makes good money for Microsoft.)
Microsoft CEO Satya Nadella is still trying to make Google dance, and OpenAI is key to this.
With Friday’s new OpenAI funding round, Microsoft’s existing deal with OpenAI won’t change, including how they share revenue, handle intellectual property, define advanced AI, and Microsoft’s exclusive rights to provide certain services.
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