The biggest story out there is the tariffs introduced yesterday by President Trump. I plan to visit that on Monday, so I have time to examine the implications on IT services. I’m going to focus on some AI and product announcements today.
OpenAI has successfully raised forty billion dollars in what is believed to be the largest private technology funding round ever, boosting its valuation to three hundred billion dollars. The funding was predominantly led by the Japanese investment firm SoftBank, which pledged thirty billion dollars, surpassing Microsoft as OpenAI’s largest investor. This latest investment doubles OpenAI’s previous valuation of one hundred fifty-seven billion dollars just six months prior. SoftBank’s initial investment includes seven billion five hundred million dollars up front, with the remainder expected by the end of the year.
In a recent report by The Information, ChatGPT has experienced a remarkable surge in revenue, increasing by 30 percent over just three months. The artificial intelligence tool now boasts 20 million paid subscribers, a significant rise from 15.5 million at the end of last year. This growth suggests that ChatGPT is generating approximately 415 million dollars in monthly revenue, equating to an annualized rate of 5 billion dollars. OpenAI has also reported an impressive 500 million weekly users, a 43 percent increase since the previous quarter, although the percentage of paying subscribers has dipped slightly from five to four percent. Despite the rapid growth, profits remain elusive as the company continues to invest heavily in infrastructure and user acquisition.
OpenAI has announced plans to release its first open-weight language model since 2019, marking a significant strategic shift for the company as it adapts to competitive pressures from efficient open-source alternatives. Chief Executive Sam Altman revealed that this powerful new model will allow developers to run it on their own hardware, moving away from OpenAI’s cloud-based subscription model.
OpenAI has announced its decision to adopt Anthropic’s Model Context Protocol, a new standard designed to enhance AI assistants’ ability to connect with various data sources. CEO Sam Altman made the announcement, highlighting that this integration will be available across OpenAI’s products, including the desktop application for ChatGPT. The Model Context Protocol is an open-source standard that enables AI models to access data from business tools and software, thus improving the relevance and accuracy of their responses. Developers have already begun implementing this protocol, with companies like Block and Replit adding support.
The open source Model Context Protocol has just been updated, marking an advancement in how artificial intelligence agents can interact with tools and data. The latest version introduces a more secure authorization framework and improved real-time communication capabilities. Microsoft has also launched a new server that enhances browser automation for AI agents, enabling them to interact with the web like humans. This update is seen as a significant leap forward in agent-tool communication, potentially setting the stage for widespread interoperability in AI systems. The protocol aims to standardize interactions across different applications, addressing a critical gap in the current landscape.
In a recent town hall, Microsoft CEO Satya Nadella highlighted the success of DeepSeek, a project that set a new standard for the company’s artificial intelligence efforts. Launched on Azure in January 2025, DeepSeek has been noted for its efficiency in optimizing systems, particularly through architecture changes beneath Nvidia’s computing layer. Nadella praised the project’s achievements, emphasizing the remarkable impact a small team of just two hundred people can have when unified toward a common goal. Despite a significant eighty billion dollar investment in AI, Microsoft has yet to achieve similar success in the App Store with its Copilot application, which has not matched the popularity of ChatGPT, regularly topping the free app charts.
Why do we care?
OpenAI’s valuation doubling in just six months underscores the speed at which the AI market is evolving. That said, there’s reason to be watching open-source models, particularly as they bypass cloud-based subscriptions. Running models on-premises or within client environments allows for greater customization and potentially lower operational costs.
By adopting Anthropic’s Model Context Protocol, OpenAI moves toward a more standardized method of integrating AI with business tools. This protocol aims to break down the silos between different data sources, which could lead to more contextual, relevant outputs from AI systems.
Despite strong revenue, OpenAI remains unprofitable, which could lead to cost-cutting measures or shifts in strategy if profitability is not achieved. Service providers dependent on OpenAI tools should have contingency plans. And. SoftBank’s aggressive investment style has led to notable failures (like WeWork). If OpenAI’s financials remain shaky, the fallout could impact partners reliant on OpenAI’s ecosystem.
