“If a company holds all the cards, they can force people to do things unnaturally.”
Going Exclusive
OpenAI announced yesterday that it had officially raised $6.6 billion in its latest investment round, an eyewatering figure that hoists the still-private AI company’s valuation to an equally eyewatering $157 billion.
But according to OpenAI, this just isn’t another major cash influx to a company that recently abandoned its nonprofit roots to embrace a for-profit model. In its announcement, OpenAI described the funding round as a sign of “progress” in its alleged “mission to ensure that artificial general intelligence benefits all of humanity.”
And that, apparently, is a burden that OpenAI believes that only it should be trusted with.
According to the Financial Times, OpenAI demanded that its eventual investors abstain from also funding any of OpenAI’s competitors such as billionaire Elon Musk’s xAI and Claude maker Anthropic. In short, if an investor wanted in on the OpenAI round, they needed to be willing to keep things exclusive.
“OpenAI said to people: ‘We’ll give you allocation but we want you to be involved in a meaningful way in the business so you can’t commit to our competitors,'” one person with knowledge of the deal told the FT.
This level of exclusivity is uncommon in the investing world. Often, because investing means access to proprietary information about a given company, an investor may naturally abstain from putting significant capital into rival companies. In other cases, though, an investor might want to spread funding across an industry, especially if they believe a nascent technology to be the future.
In any case, OpenAI and CEO Sam Altman’s insistence on exclusivity as central to the deal is pretty rare — and could signal that OpenAI is feeling the heat from well-funded industry rivals.
Uber Flashbacks
Some have pointed out that the strange deal echoes a policy held by the ridesharing app phenom Uber in the 2010s.
“If a company holds all the cards,” one unnamed VC told the FT, “they can force people to do things unnaturally.”
Through that lens, OpenAI’s ability to raise nearly $7 billion while demanding exclusivity seems to speak to the company’s dominance in the AI industry landscape.
AI is an intensely competitive market, with the likes of Google, xAI, Meta, and Anthropic all in the race to come out ahead. And yet, it looks like major funds are willing to put all of their eggs in OpenAI CEO Sam Altman’s basket.
“Were grateful to our investors for their trust in us,” reads OpenAI’s announcement, “and we look forward to working with our partners, developers, and the broader community to shape an AI-powered ecosystem and future that benefits everyone.”
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