From GeekWire, March 1:
Amazon’s OpenAI investment and cloud partnership made big headlines Friday, but the mechanics of the deal — including how the money flows, what triggers the payments, and what happens if things go sideways — are buried in SEC filings that tell a more complicated story.
Here’s how it works, what the filings say, and what they’re still keeping under wraps.
The money: Amazon is investing up to $50 billion in OpenAI, in two stages.
- $15 billion in OpenAI Series C Preferred Stock, due March 31.
- A $35 billion commitment that comes later, with the timing dependent on a series of triggers. (The filing puts the exact figure at $34,999,999,447.98. The share price didn’t divide evenly into $35 billion, leaving it $552.02 short. Every penny counts!)
It’s part of a larger funding round: OpenAI raised $110 billion total at a $730 billion pre-money valuation, with SoftBank and Nvidia each contributing $30 billion alongside Amazon’s $50 billion. OpenAI said additional financial investors are expected to join as the round progresses.
Microsoft, OpenAI’s largest existing investor, has not yet participated in the round. CNBC reported that Microsoft still has an option to join. Microsoft and OpenAI put out a joint statement saying their partnership remains unchanged. (More on that below.)
Microsoft did, however, invest $5 billion in Anthropic last year, so with the latest deals, both Seattle-area tech giants now have their own stakes in the makers of Claude and ChatGPT.
The triggers: Amazon can buy its remaining shares whenever it wants, at its discretion, according to the filings. But two events can force its hand, requiring the additional investment.
- A “Mandatory Funding Event” that requires Amazon to buy all remaining shares within five business days. The filing doesn’t disclose the milestone. The definition is redacted.
- An initial public offering by OpenAI. If OpenAI notifies Amazon after filing for an IPO confidentially with the SEC, Amazon must buy every remaining share. It gets four weeks from the notice or five business days after the public S-1, whichever is later.
OpenAI CEO Sam Altman, talking about the deal in a joint appearance with Amazon CEO Andy Jassy on CNBC on Friday, said OpenAI is “open to going public at the right time.”
The form of the investment could also change. If Amazon buys its remaining shares before an IPO, it gets Series C Preferred Stock. If the purchase happens after OpenAI goes public, the filing says Amazon receives common stock instead.
The expiration date: The equity commitment expires Dec. 31, 2028. If the triggers haven’t happened and Amazon hasn’t invested the full amount by then, the obligation ends....
....MUCH MORE
