softbank, openai launch new joint venture in japan as ai deals grow ever more circular

The Self-Referential Nature of AI Investment

Contemporary AI investment strategies increasingly resemble a closed-loop system. AI firms and their financial backers appear to be structuring deals to guarantee that profits ultimately return to their own holdings.

A prime example is SoftBank’s substantial investment in OpenAI, encompassing billions of dollars for both the company itself and the construction of AI data centers and supporting infrastructure. Recently, SoftBank initiated a 50-50 joint venture with OpenAI in Japan.

Introducing SB OAI Japan

SB OAI Japan will focus on adapting and marketing OpenAI’s enterprise-level technology to businesses within Japan. Notably, SoftBank is positioned to be the inaugural client of this new venture.

The companies describe their offering as “Crystal intelligence,” a comprehensive AI solution designed for corporate management and operational improvements in the Japanese market. This solution integrates OpenAI’s enterprise products with localized implementation and support services provided by SB OAI Japan.

Internal Adoption and Feedback Loop

SoftBank is actively promoting the adoption of AI internally. The company reports that all its employees are currently integrating AI tools into their daily workflows. Furthermore, they have generated 2.5 million customized ChatGPT instances for internal use.

The conglomerate intends to deploy the joint venture’s solutions across its diverse business units. This will allow for validation of their effectiveness, refinement of product development, and facilitate broader “business transformation.” The resulting insights will then be shared with other companies through SB OAI Japan.

Echoes of Past Bubbles

This trend is prompting analysts to express caution regarding the significant capital influx into AI development and the resulting high valuations of related companies. Comparisons are being drawn to the dot-com boom, where widespread internet adoption fueled venture capital investment and inflated valuations.

Similar patterns have emerged in previous decades, with substantial funds allocated to unproven business models lacking demonstrable returns on investment. The current situation raises concerns about a potential repeat of these historical cycles.

Investment in AI is currently being scrutinized for parallels to past speculative bubbles.