Microsoft and OpenAI have reached a deal to allow the ChatGPT maker to restructure itself into a public-benefit corporation, valuing OpenAI at $500bn and giving it more freedom in its business operations. The deal, unveiled on Tuesday, removes a major constraint on raising capital for OpenAI that has existed since 2019. As its ChatGPT service exploded in popularity, those limitations had become a notable source of tension between the two companies. Microsoft will still hold a stake of about $135bn, or 27 percent, in OpenAI Group PBC, which will be controlled by the OpenAI Foundation, a nonprofit, the companies said. Microsoft, based in Redmond, Washington in the United States, has invested $13.8bn in OpenAI, with Tuesday's deal implying that the firm had generated a return of nearly 10 times its investment.

A group of investors led by Elon Musk is offering about 97.4 billion to buy the nonprofit behind OpenAI, escalating a dispute with the artificial intelligence company that Musk helped found a decade ago. Musk and his own AI startup, xAI, and a consortium of investment firms want to take control of the ChatGPT maker and revert it to its original charitable mission as a nonprofit research lab, according to Musk's attorney Marc Toberoff. OpenAI CEO Sam Altman quickly rejected the unsolicited bid on Musk's social platform X, saying, "no thank you but we will buy Twitter for 9.74 billion if you want." Musk bought Twitter, now called X, for 44 billion in 2022. Musk and Altman, who together helped start OpenAI in 2015 and later competed over who should lead it, have been in a long-running feud over the startup's direction since Musk resigned from its board in 2018.

The creators of ChatGPT are poised to release a new search product to rival Google, according to reports. The new feature, expected to be confirmed by Microsoft-backed OpenAI on Monday, will allow users to search the web via the popular chatbot. The details of how this will function have not been revealed, but it is likely that the AI will search the web for users and generate results based on what it finds. For example, this could let users ask ChatGPT a question and receive much more detailed answers that cite web sources like Wikipedia or online blogs. If true, it could present the biggest challenge yet to Google's search engine supremacy.

Elon Musk supported making OpenAI a for-profit company, the ChatGPT maker said, attacking a lawsuit from the wealthy investor who has accused the artificial intelligence business of betraying its founding goal to benefit humanity as it pursued profits instead. In its first response since the Tesla CEO sued last week, OpenAI vowed to get the claim thrown out and released emails from Musk, escalating the feud between the San Francisco-based company and the billionaire that bankrolled its creation years ago. "The mission of OpenAI is to ensure AGI benefits all of humanity, which means both building safe and beneficial AGI and helping create broadly distributed benefits," OpenAI said in a blog post late Tuesday from five company executives and computer scientists, including CEO Sam Altman. "We intend to move to dismiss all of Elon's claims." AGI refers to artificial general intelligence, which are general purpose AI systems that can perform just as well as -- or even better than -- humans in a wide variety of tasks.

The lawsuit is the latest salvo in the ongoing debate over how AI tools should be trained and whether the companies behind them owe anything to the original creators of the training data. Large language models are generally trained on billions of sentences of text pulled from the internet, including news stories, Wikipedia and comments on social media sites. OpenAI and other AI companies such as Google and Microsoft do not say specifically what data they use, but AI critics have long suspected that it includes well-known collections of pirated books that have circulated online for years.

The US's top competition watchdog has opened an investigation into OpenAI, the maker of ChatGPT, on claims it has run afoul of consumer protection laws by putting personal reputations and data at risk. The move marks the strongest regulatory threat to the Microsoft-backed startup that kicked off the frenzy in generative artificial intelligence, enthralling consumers and businesses while raising concerns about its potential risks. The Federal Trade Commission (FTC) this week sent a 20-page demand for records about how OpenAI addresses risks related to its AI models. The agency is investigating whether the company engaged in unfair or deceptive practices that resulted in "reputational harm" to consumers. One of the questions has to do with steps OpenAI has taken to address the potential for its products to "generate statements about real individuals that are false, misleading, or disparaging".

Elon Musk is reportedly planning to launch an artificial intelligence company to compete with OpenAI, the creator of ChatGPT, as Silicon Valley battles for dominance in the rapidly developing technology. The billionaire boss of Tesla and Twitter is in the process of bringing together a team of AI researchers and engineers and is in talks with several investors about the project, according to the Financial Times. "A bunch of people are investing in it … it's real and they are excited about it," a person with knowledge of the talks told the newspaper, which cited Nevada business records showing that on 9 March Musk incorporated a company called X.AI of which he is the company's sole director. The move, which would mean him joining tech giants Microsoft, Google and Amazon and startups including OpenAI in the fast-changing generative AI space, appears to signal a rapid change of direction. Only a few weeks ago Musk co-signed a letter in which he and more than 1,800 others demanded a six-month pause in AI research.