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OpenAI found a way to circumvent the exclusivity. The deal was poorly defined by Microsoft. OpenAI had started selling a service on AWS that had a stateful component to it, not purely an API. Obviously Microsoft didn’t like that and confronted Altman, and this is the settlement of that confrontation, OpenAI doesn’t need to do workarounds, Microsoft won’t sue to enforce exclusivity, and Microsoft doesn’t have to pay dev share to OpenAI. AWS is a much bigger market so OpenAI doesn’t care.
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Microsoft is a major shareholder of OpenAI, they don't want their investment to go to 0. You don't just take a loss on a multiple-digit billion investment.
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I think you’re right about this deal. But it’s kind of funny to think back and realize that Microsoft actually has just written off multi-billion-dollar deals, several times in fact.
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One (1) year after M$ bought Nokia they wrote it off for $7.6 Billion.

There’s no upper limit to their financial stupidity.

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The metaverse is another example if anyone doubts the bounds of corporate stupidity.
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Why?

FaceBook largely requires an Apple iPhone, Apple computer, "Microsoft" computer, "Google" phone, or a "Google" computer to use it. At any point one of those companies could cut FaceBook off (ex. [1]).

The Metaverse was a long term goal to get people onto a device (Occulus) that Meta controlled. While I think an AR device is much more useful than VR; I'm not convinced that it's a mistake for Meta to peruse not being beholden to other platforms.

[1]: https://arstechnica.com/gadgets/2019/01/facebook-and-google-...

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I think this is sane washing their idea in the modern context of it having failed. I think at the time, they thought VR would be the next big thing and wanted to become the dominant player via first mover advantage.

The headsets don’t really make sense to me in the way you’re describing. Phones are omnipresent because it’s a thing you always just have on you. Headsets are large enough that it’s a conscious choice to bring it; they’re closer to a laptop than a phone.

Also, the web interface is like right there staring at them. Any device with a browser can access Facebook like that. Google/Apple/Microsoft can’t mess with that much without causing a huge scene and probably massive antitrust backlash.

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I think headsets might work, but I think Meta trying to use their first mover advantage so hard so early backfired. Oculus, as a device, became less desirable after it required Facebook integration.

It's kind of like Microsoft with copilot - the idea about having an AI assistant that can help you use the computer is great. But it can't be from Microsoft because people don't trust them with that.

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Interaction feels like the issue with headsets. You either need a fair bit of space for gesture controls, or you have to talk to yourself for voice control.

I think VR has more niche uses than the craze implied. It’s got some cool games, virtual screens for a desktop could be cool someday, but I don’t see a near future where they replace phones.

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People are discounting the fact the almost no one wants a contraption on their head for an extended period of time. It is a universal preference

Until VR is done via glasses or some wire you stick in your neck matrix style, it will never take off

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It’s premature to say that the idea failed; The flashy controversial “metaverse” angle where you can live your whole life on the Quest or whatever isn’t happening, but their investment into AR/VR has definitely started to show real payoff potential with their glasses.

They address the friction of use issue being discussed, they’re even more discrete and available than a phone. And they are getting a lot of general public recognition, albeit not for the best reasons (people discretely filming, for genuine social media reactions but also for other reasons..).

Their tech is improving at a decent pace and they’ve recently put out a product that is both ready for consumer (at least with select use cases) adoption, and actually reasonably available to the public.

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I don’t mean that VR failed entirely, just that the metaverse as a concept is basically dead. VR will live on in the niches where it makes sense.

If you’re talking about the Meta Ray Ban glasses, I wouldn’t really call that a successor. There’s no AR or VR to them that I can tell; just glasses with speakers, a mic and a camera. It’s a neat product, but not a platform in the way VR was meant to be. They also have real competition. I do actually own a pair of the Bose headphone sunglasses, which are practically the same product without a camera (which I’m sure they could add if they wanted). Unless people suddenly care about the Meta AI integration, and again; Bose or someone else could add a phone companion app.

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As someone who was there: nope. This isn't sanewashing.

Apple was directly (and IMO arguably illegally) shutting down Facebook teams and products by playing app store chicken on refusing to allow Facebook to publish updates on a week-to-week basis. Literally would throw down and refuse unless some features were blocked. It came to a head where Zuck literally called Tim Cook during a keynote to push it through.

They also literally had reverse-engineering teams cracking open the Facebook app on a regular basis, which we discovered because of some internal methods we figured out how to invoke with some clever indirection. There was a chicken-and-egg problem and they eventually developed facilities to automatically instrument private method invocations to comprehensively defeat clever static analysis circumvention workarounds.

Also, VR hasn't failed, but it's gone silent and coasted when investing in VR growth took the backseat to investing AI. They made a couple of bad bets in VR but a lot of good ones so it was warranted, but not exactly a failure.

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Naming your company off a product that doesn't really exist yet and then ultimately fails is a pretty crazy and stupid thing to do. A bit cart before horse.
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I think they were trying to disassociate themselves from the PR disasters Facebook was facing back then (privacy related IIRC).
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"I'm not convinced that it's a mistake for Meta to peruse not being beholden to other platforms."

But thinking AR/VR was the way to go is a failure to read the room. If anything the up and coming generations seem to be recoiling from tech.

Regardless, as Microsoft found, it's too late for a 3rd platform and it seems somehow that there's only room in the world for two.

(Meta would have done better to start up a line of caffeinated sugar drinks.)

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> I'm not convinced that it's a mistake for Meta to peruse not being beholden to other platforms.

Devoid of other context, it’s hard to disagree. But your parent comment only asserted that the metaverse specifically as proposed by Facebook was an obviously stupid idea.

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For the money spent(over $80b), they could have launched a phone or a car. Now their pivot is to smart glasses which require a phone so once again they are beholden to phone manufacturers.
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>Why?

Patrick Boyle did a nice video a few weeks back: https://www.youtube.com/watch?v=8BaSBjxNg-M

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> At any point one of those companies could cut FaceBook off (ex. [1]).

Some of those companies can cut off invasive apps.

There is no risk of facebook.com getting blocked. And absolutely nobody is going to prefer a headset over a website for doing facebook things.

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Because it's been very clear for a long time that the vast majority of people do not want to play VR Second Life.
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Meta's vision was worse than that. They were trying to hype doing work meetings in VR. There's a case to be made that VR games and VR universes can be fun... But work meetings?
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Mark Zuckerberg using his company to build things he's the primary user for?
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It worked when he wanted a system for ranking Harvard girls by appearance.
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> There's a case to be made that VR games and VR universes can be fun... But work meetings?

If it's actual holograms like in Star Wars? Sure, why not. Get the visual and body language cues of the rest of the room but no one has to physically congregate at a location.

But pixelated, cartoon avatars? Yeah, wtf.

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so after $80 billion spent, they must have an ecosystem of hundreds of millions of users? Right?

Maybe they should have spent that on the facebookphone

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Good luck using an Oculus in your car or while waiting the bus.

If it was really their goal, they would have made an Android competitor. Maybe a fork like amazon did and sell phones that supported it.

Zuckerberg had one great idea (and then it wasn't really his idea) at the right time, since then he failed over and over at everything else. 'Internet for all', remember ?

I really wouldn't give them the benefit of the doubt.

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Can anybody cut meta off? I don't think you could mass market a device with no access to FB, IG or WS.

Maybe a niche product could do it, but good luck selling a laptop that won't open FB

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That's both niche and for kids too young to have a facebook account in the first place.
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Because it's been a massively expensive failure. They can't just will their own platform into existence just because it would be good to have, consumers have a say and they've rejected it completely.
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Probably more that they are compute constrained. In his latest post Ben Thompson talks about how Microsoft had to use their own infrastructure and supplant outside users in the process so this is probably to free up compute.
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I think it's this. They sell a crap ton of b2b inference through Azure and I'm sure this competes with resources needed for training.
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1- Getting OpenAI's models in Azure with no license fee is pretty nice. 2- Microsoft owns ~15-27% of OpenAI, if the agreement was hurting OpenAI more than it was helping Microsoft, seems reasonable to change the terms.
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> Microsoft will no longer pay a revenue share to OpenAI.

I feel this looks like a nice thing to have given they remain the primary cloud provider. If Azure improves it's overall quality then I don't see why this ends up as a money printing press as long as OpenAI brings good models?

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OpenAI was also threatening to accuse "Microsoft of anticompetitive behavior during their partnership," an "effort [which] could involve seeking federal regulatory review of the terms of the contract for potential violations of antitrust law, as well as a public campaign" [1].

[1] https://www.wsj.com/tech/ai/openai-and-microsoft-tensions-ar...

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Pot? Meet Kettle.
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Does this mean Microsoft gets OpenAI's models for "free" without having to pay them a dime until 2032?

And on top of that, OpenAI still has to pay Microsoft a share of their revenue made on AWS/Google/anywhere until 2030?

And Microsoft owns 27% of OpenAI, period?

That's a damn good deal for Microsoft. Likely the investment that will keep Microsoft's stock relevant for years.

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own 27%. but are entitled to OpenAI profits of 49% for eternity (if OpenAI is profitable or government steps in)
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  own 27%. but are entitled to OpenAI profits of 49% for eternity (if OpenAI is profitable or government steps in)
Where is the 49% coming from? The new deal does not talk about that.
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Does anyone expect azure quality to improve? Has it improved at all in the last 3 years? Does leadership at MS think it needs to improve?

I doubt it

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No and at this point tying yourself to azure is a strategic passive and anyone making such decisions should be held responsible for any service outage or degradation.
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This is certainly... an opinion.

AWS's us-east-1 famously takes down either a bunch of companies with it, or causes global outages on the regular.

AWS has a terrible, terrible user interface partly because it is partitioned by service and region on purpose to decrease the "blast radius" of a failure, which is a design decision made totally pointless by having a bunch of their most critical services in one region, which also happens to be their most flaky.

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Nobody is winning any UX prize there. Azure, AWS, GCP... they are all terrible. Back then GCP for instance used to only work reliably on chromo-based browsers. Azure has that horrible overlay UI that abuses extended real estate that just doesn't work.

But azure wins most prizes for being terrible becuase, among other things, https://isolveproblems.substack.com/p/how-microsoft-vaporize.... It's not the worst provider maybe because oracle is somehow still kicking around.

Its just a bad product. Just like windows, OneDrive, teams and basically everything Microsoft has pumped out in the past decade.

Microsoft is in the top 5 most valuable companies in the world. It's got azure that is a huge cloud provider. And yet it was utterly unable to present its answer in the AI race. Not even a bad model with a half baked harness. Nothing. And meanwhile they are trying to port NTFS to low powered FPGAs because insanity. Just let that sink in.

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Check out hetzner ui (regardless if you like their services, i know some ppl have opions or experiences lol) BUT, their cloud ux/ui is fantasties for a cloud company!
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I worked extensively with Hetzner and I love them! But it think they are in a different class than these other providers, mainly in terms of global presence so I didn't include them and wouldn't for instance recommend them to my current employer. But indeed the Hetzner console is great. The robot not so much, but it's serviceable.
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I don’t see how you could care (a lot) about both the UI and reliability.
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One is caused by the other. Amazons engineers decided to split the interface in a “user hostile” manner with the stated purpose of increasing reliability… which didn’t materialise. The clunky UI did.

Or maybe you can provide a better explanation for why users had to “hunt” through hundreds(!) of product-region combinations to find that last lingering service they were getting billed $0.01 a month for?

This just doesn’t happen in GCP or Azure. You get a single pane of glass.

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One of the things I find about AWS is that every service UI feels different. It's like every service was designed by a totally different team.

For all its flaws at least Azure has consistent UI.

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You need to understand history for this. It's because of the famous "Bezos API mandate memo" https://chrislaing.net/blog/the-memo/. It was 2002, nobody was doing anything close to that.

You could argue now that that's no excuse anymore given it's one of the most valuable companies in the world, but that would dismiss the fact they have other priorities than a complete UI overhaul for consistency, and that rewrites are very dangerous, for instance people are already used to the UX pitfalls in the console, it's the devil they know, and changing that will be upsetting to the vast majority of users.

So there you have it. You know what you are getting into, AWS is a behemoth and it's 2026. Don't use the console like it's 2010. Use IaC for any nontrivial work, otherwise you only have yourself to blame.

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I understand how this came to pass (I didn't know it before so thanks for the insight!)

But as a customer I absolutely hate working with AWS tech. Their stuff is a mess and I feel like I shouldn't have to get my head around their idiosyncracies. I prefer Azure even though Microsoft is a terrible company to work with. I find the AWS people and attitude a lot nicer but their services are a mess. If I do something new I prefer using Azure despite having to work with Microsoft.

Microsoft is not a "trusted partner" wanting the best for you, they're always trying to screw you over in favour of selling some new crap to your boss. Always that stupid sales drive, whereas the people from AWS are very focused on building success together. But still, their tech is just so bad unless you spend all your days working with it and really become an expert on what they offer. That's not tech, just corporate servitude. And I've always avoid that position, I don't want my career tied to some big brand name. I don't want to be "the AWS expert" or "the MS expert".

But I have to say I hate cloud (and "the world according to big tech") in general, and it's one of the reasons I'm not really involved in server infrastructure anymore these days. I'll gladly automate but not with their tooling, I prefer something more open and not tied to specific vendors. But I rarely work with that now. So yeah when that happens I'm making a one-off unicorn and figuring out all the Infra as code stuff is not worth it.

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I'm right there with you, don't get me wrong. Choosing a cloud provider is like choosing the lesser of many evils. We are, however, coming to a point where k8s is viable for most workloads, so it's less complex today to spin up a project with cloud mobility in mind than it was 10 years ago if you plan it right.
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> It's like every service was designed by a totally different team.

Yes, by design.

Conceptually this improves velocity and reduces the blast radius of failure.

In practice, everything depends on IAM, S3, VPC, and EC2 directly or indirectly, so this doesn't help anywhere near as much as one would think.

Azure and GCP have a split control plane where there's a global register of resources, but the back-end implementations are split by team.

That way the users don't see Conway's Law manifest in the browser urls... as much. (You still do if you pay attention! In Azure the "provider type" is in the path instead of the host name.)

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> Conceptually this improves velocity and reduces the blast radius of failure.

Hm yes but I hate working with it as a customer because it is so confusing. Everything works differently and there is a lot of overlap (several services exist that do the same thing). It seems like an amateurish patchwork.

I understand it has benefits to have different teams working on different services but those teams should still be aligned in terms of UX and basic concepts.

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I mean, if you care about the reliability of your own service you would not be using the AWS UI at all. Use the api, via automation.
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MS incentivizes feature quantity, and the leadership are employees like any other. Product improvements are not on the table unless the company starts promoting people based on it. Doesn't look this will start happening any time soon.
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Don’t worry I’m sure there’s a few products without copilot integration still. They’ll get to them before too long.
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This is probably a delayed outgrowth of the negotiations last year, where Microsoft started trading weird revenue shares and exclusivity for 27% of the company.
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I think MS wants OpenAI to fail so it can absorb it
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MS put 10B for 50% if I remember correctly. OpenAI is worth many multiples of that.
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> OpenAI is worth many multiples of that

valued at --which I'd say is a reasonable distinction to make right about now

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Their revenue is 20B, so they still worth multiples of 10B regardless of valuation even if you consider the basic 5x revenue valuation

https://www.reuters.com/business/openai-cfo-says-annualized-...

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"The basic 5x revenue valuation" doesn't work for businesses that aren't profitable.
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It is also unclear to me how much real debt they carry. They have famously been signing many deals: RAM, datacenters, maybe nuclear power plants -I no longer know what is a joke or not. They must be carrying hundreds of billions in paper debt obligations, which is tough to payback at $20B revenue.
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I'm giddy about reading their S1 in the near future. We're about to have another "We What the Fuck" moment.
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> Their revenue is 20B, so they still worth multiples of 10B regardless of valuation...

I can easily generate double that revenue, by selling $20 bills for $10.

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When they put 10B in, they got weird tiered revenue shares and other rights. That has been simplified to 27% of OpenAI today. I don't know what that meant their 10B would be worth before dilution in later rounds.
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> OpenAI is worth many multiples of that.

How?

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Because they recently issued shares at a price many multiples of that, and people bought them. How else would you define financial worth?
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I would use your number adjusted by some demand elasticity curve.
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The "back-of-the-napkin" only has enough room to estimate based on recently issued share price. Seems reasonable to me.
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Sure, for napkin level math you can go with this, and multiply by some simple multiplier, I like 70%.
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$250b committed to azure helps. especially when some of that is your own investment coming back.
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What aspects of the deal do you think kneecapped OpenAI the most?
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