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387 points reaperducer | 2 comments | | HN request time: 0.627s | source
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crazygringo ◴[] No.45772276[source]
This is such a strange article -- there's nothing particularly unusual going on here.

The first example basically stands in for all of them -- Microsoft invests $13B in OpenAI, and OpenAI spends $13B on Azure. This is literally just OpenAI purchasing Microsoft cloud usage with OpenAI's stock rather than its cash. There is nothing unusual, illicit, or deceptive about this. This is entirely normal. You can finance your spending through debt or equity. They're financing through equity, as most startups do, and they presumably get a better deal (better rates, more guaranteed access) via Microsoft than via other random investors and then buying the cloud compute retail from Microsoft.

This isn't deceiving any investors. This is all out in the open. And it's entirely normal business practice. Nothing of this is an indicator of a bubble or anything.

Or take the deal with Oracle -- Oracle is building data centers for OpenAI, with the guarantee that OpenAI will use them. That's just... a regular business deal. What is even newsworthy about this? NYT thinks these are "circular" deals, but by this logic every deal is a "circular" deal, because both sides benefit. This is just... normal capitalism.

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1. philipwhiuk ◴[] No.45772323[source]
> Microsoft invests $13B in OpenAI, and OpenAI spends $13B on Azure.

This isn't deceiving any investors.

It's Microsoft increasing its revenue by selling its stock.

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2. crazygringo ◴[] No.45772359[source]
Microsoft isn't selling any stock. It's using its cash.

And an increase in revenue isn't the point. Microsoft isn't doing this to try to bump its short-term stock price or anything -- investors know where revenue is coming from. Microsoft is doing it because it thinks OpenAI is a good investment and wants to make money with that investment and have greater control.