Databricks Acquires AI Startup MosaicML for $1.3 Billion

Databricks said Monday it had agreed to acquire AI startup MosaicML for $1.3 billion in a move to build out the company’s generative AI offerings. 

MosaicML, founded in 2021 with a goal of bringing down the cost of training large artificial intelligence models, has released open source AI tools that have been downloaded more than three million times. Last week, San Francisco-based MosaicML unveiled MPT-30B, an open source large language model that the company says outperforms the original GPT-3 and is “competitive” with other open-source models such as Meta’s LLaMa and Falcon 40B, supported by the United Arab Emirates’ government.

San Francisco-based Databricks, a cloud data storage and analytics company founded in 2013, said that the partnership will allow clients “to build, own and secure generative AI models with their own data,” according to the press release.

The deal between the two private companies is the latest sign of an AI arms race, as Alphabet's Google, Microsoft and venture capitalists heap billions of dollars on AI startups. At the same time, companies are increasingly turning to their own data as a source of revenue. That proprietary data could also be used to take a foundational model such as MosaicML’s offering and train it further to have a customized ChatGPT-like tool. Generative AI use deep learning models to create new and original content, such as images, music, or text, based on data it has learned from.

Companies are pouring money into generative AI technology and startups, with the global generative AI market expected to reach $42.6 billion this year, according to Pitchbook. C2 Investments is coaxing AI startups to their venture fund with access to a supercomputer. Earlier this month, Accenture announced its putting $3 billion towards AI.