OpenAI Debacle l Increases Support for Open Source AI Competitors

In the wake of the recent leadership transition turmoil at OpenAI, the parent company of ChatGPT, IT giants have rallied behind open source alternatives.

Other established AI technology companies may have benefited from the recent leadership drama at OpenAI in terms of attention to increase sales and adoption of their products.

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Open Source AI Startups Are Making Waves

Many big companies, including Qualcomm, Nvidia, Salesforce, and former Google CEO Eric Schmidt, have begun to refocus their investments on other open-source AI businesses after Sam Altman’s brief resignation as CEO of OpenAI.

The regrettable failure at OpenAI has been good for a couple of firms, like Hugging Face, a startup in New York that makes tools for creating machine learning apps, and Mistral AI. Before this, HuggingFace had a valuation of up to $4.5 billion following a $235 million investment round in August.

An influx of over $400 million has been poured into the French-American open-source software company by as many as 30 investors from a wide range of industries, including Sequoia Capital, Qualcomm, Google, Nvidia, IBM, and Qualcomm.

Just weeks before the OpenAI scandal broke, Hugging Face’s co-founder and CEO, Thomas Wolf, noted that his firm is “not following the Silicon Valley playbook.”

AI developers are raising and spending money at a dizzying rate. That is not our frame of thinking. There was no need to seek funding as we have been in operation for seven years. We should have no trouble making plans for the future.

However, Schmidt and other business heavyweights have backed Mistral AI, which is associated with Alphabet. Despite receiving up to $113 million in funding from Lightspeed Venture Partners and other prominent Silicon Valley figures, the artificial intelligence firm is still targeting an extra $400 million, valued at $1 billion.

Xavier Niel, a French telecom and internet entrepreneur, and Felicis Ventures, a U.S. venture capital firm, recently led the $126 million funding round for Poolside AI, another open-source competitor.

Sam Altman Is Back as OpenAI CEO

Even though the OpenAI drama only lasted for a week, all of these open-source AI platforms have made decent headway in that time.

Even with Sam Altman’s return to his role as CEO of OpenAI, the AI venture scene’s future is far from certain. A few days before to his return, Microsoft CEO Satya Nadella revealed that Altman will be heading up the company’s artificial intelligence research unit.

But the first leadership shakeup at OpenAI has rattled the market, and many are rethinking their reliance on just one generative AI vendor. Hugging Face and Mistral AI are strong competitors to OpenAI, but they will continue to grow in popularity.