SoftBank and OpenAI's $100B Bet: Unraveling the Economic Puzzle Behind AI's Biggest Deals

SoftBank and OpenAI announced a new 50-50 joint venture this week to sell enterprise AI tools in Japan under the brand Crystal Intelligence. The partnership, which marks a significant expansion of OpenAI's presence in the region, has raised questions about the economic value of AI's biggest deals and whether they are creating real value or simply moving money in circles. According to TechCrunch's Equity podcast, Kirsten Korosec, Anthony Ha, and AI editor Russell Brandom discussed the implications of the deal, citing concerns that SoftBank's role as a major investor in OpenAI may be creating a circular flow of money. "This deal has people skeptical because SoftBank is already a major investor in OpenAI, and now they're partnering to sell AI tools in Japan," said Russell Brandom. "It's not entirely clear what the economic value of this deal is, or whether it's just a way to move money around." The partnership between SoftBank and OpenAI is a significant development in the AI industry, which has seen a surge in investment and deal-making in recent years. However, the lack of transparency and clear economic value in some of these deals has raised concerns among industry experts and investors. "The AI industry is still in its early days, and we're seeing a lot of hype and speculation around these deals," said Anthony Ha. "But when you dig deeper, it's not always clear what the real value is." The joint venture with SoftBank is not the first time OpenAI has partnered with a major investor to expand its presence in a new market. In 2022, the company partnered with Microsoft to develop and deploy its AI technology in the enterprise sector. However, the SoftBank deal is significant because it marks a major expansion of OpenAI's presence in Japan, a key market for the company. The implications of the deal go beyond the AI industry, raising questions about the sustainability of the current investment model and the potential impact on the broader economy. "The AI industry is creating a lot of wealth, but it's not always clear where that wealth is going," said Kirsten Korosec. "We need to have a more nuanced conversation about the economic value of these deals and how they're impacting society." As the AI industry continues to evolve, it remains to be seen how deals like the SoftBank-OpenAI partnership will shape the future of the industry. However, one thing is clear: the lack of transparency and clear economic value in some of these deals will continue to raise questions and concerns among industry experts and investors.