TikTok pays $30 million a month to use OpenAI's AI, an amount equivalent to a quarter of Microsoft's cloud revenue
TikTok was paying Microsoft $20 million a month for the use of OpenAI's AI models, business magazine The Information reported.
TikTok Spending Drove Microsoft's Booming AI Business — The Information
TikTok is one of Microsoft's biggest AI cloud computing customers - The Verge
https://www.theverge.com/2024/7/31/24210667/microsoft-tiktok-ai-openai-customer
TikTok is Microsoft's biggest AI customer, thanks to OpenAI
https://qz.com/tiktok-microsoft-ai-customer-20-million-openai-1851609817
A source familiar with the matter told The Information that as of March 2024, TikTok was paying Microsoft nearly $20 million a month for access to OpenAI's models.
The amount represents 25% of Microsoft's revenue from its cloud business, The Information reports.
Due to this favorable business environment, Microsoft's cloud division is expected to generate $1 billion (about 150 billion yen) in annual revenue from its AI business, but if TikTok succeeds in developing its own large-scale language model (LLM) in the future, TikTok will significantly reduce its dependence on Microsoft and OpenAI. It has also been pointed out that.
For example, in December 2023, it was discovered that TikTok's Chinese parent company, ByteDance, was illegally using OpenAI's ChatGPT to develop its own LLM model, and OpenAI immediately stopped providing its API to ByteDance after receiving the news.
By Solen Feyissa
Microsoft is known to have signed a huge investment deal with OpenAI to become the exclusive cloud provider for the company's models, and is also known to be spending heavily to build a supercomputer to run ChatGPT.
In its fourth quarter 2024 earnings report released at the end of July 2024, Microsoft revealed that its cloud computing service, Microsoft Azure, had a revenue growth rate of 29%. In addition, according to Microsoft's Chief Financial Officer (CFO), Amy Hood, Azure's revenue growth rate in the first quarter of 2025 is expected to remain flat at 28-29%.
The U.S. government has forced ByteDance, a Chinese company, to choose between selling TikTok's U.S. business or withdrawing from the U.S., citing the company's threat to U.S. national security. Even if TikTok does not develop its own LLM, it is unclear whether the company's relationship with Microsoft and OpenAI will continue.
It has also been pointed out that the problems Microsoft faces are similar to those faced by NVIDIA, which is making huge profits from supplying AI hardware. It is expected that American AI companies will continue to be on edge about the progress of popular Chinese social networking sites in the future.
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