TikTok is throwing $20 million a month at OpenAI via Microsoft

🌈 Abstract

The article discusses TikTok's significant spending on OpenAI models through Microsoft, which has made up about 25% of Microsoft's AI revenue. It also highlights the potential risk for Microsoft as TikTok's parent company, ByteDance, is reportedly trying to build its own AI models using OpenAI's technology. The article draws parallels to Nvidia's similar situation, where its customers are using its hardware to build their own AI chips, potentially reducing Nvidia's future business. The article also mentions other big-name customers that purchase OpenAI models through Microsoft, such as AT&T, Coca-Cola, Fidelity, Volvo, and Walmart.

🙋 Q&A

[01] TikTok's Spending on OpenAI Models through Microsoft

1. What is the amount of TikTok's monthly spending on OpenAI models through Microsoft?

• According to anonymous sources cited by The Information, TikTok has been spending $20 million monthly, as of March, to purchase OpenAI models through Microsoft.

2. What percentage of Microsoft's AI revenue does TikTok's spending make up?

• TikTok's big buys have made up about 25% of Microsoft's AI revenue.

3. What is the potential risk for Microsoft regarding TikTok's AI model development?

• TikTok's parent company ByteDance is reportedly trying to build its own AI models using OpenAI's technology. If successful, TikTok will no longer need OpenAI, nor Microsoft.

[02] Comparison to Nvidia's Situation

1. What is the similar risk that Nvidia faces compared to Microsoft?

• Nvidia's business is highly concentrated among behemoth tech companies, which have used Nvidia's hardware to build their own AI chips. This raises concerns that eventually, some of Nvidia's customers will no longer need its products.

2. How does this situation impact investors and analysts?

• The risk that Nvidia's customers will build their own AI chips raises concerns for investors and analysts about Nvidia's future business.

[03] Other OpenAI Customers

1. What other big-name customers reportedly purchase OpenAI models through Microsoft?

• Other big-name customers that reportedly purchase OpenAI models through Microsoft include AT&T, Coca-Cola, Fidelity, Volvo, and Walmart.

2. What other OpenAI corporate customers buy its software directly from the AI startup?

• Other OpenAI corporate customers, such as Zoom, Klarna, and Salesforce, buy its software directly from the AI startup.