Acquisition of Rockset strengthens OpenAI’s position in the enterprise space
Acquisition of Rockset strengthens OpenAI’s position in the enterprise space

OpenAI’s purchase of database analytics startup Rockset suggests that the generative AI pioneer is looking to strengthen its enterprise offering with real-time data and model-fine-tuning capabilities.

The acquisition, announced on June 21, gives GenAI provider Rockset access to cloud-native database technology to improve the ability of its models to retrieve and generate more current information.

These capabilities are critical for OpenAI to expand the scope of its GPT Large Language Model (LLM) line with the LLM features desired by enterprises, said Kashyap Kompella, CEO of RPA2AI Research.

“With data ingestion, processing, search and analysis capabilities, as well as support for SQL, No SQL and vector databases, Rockset fills gaps in OpenAI technology and can become more suitable and attractive for enterprise use cases,” said Kompella.

OpenAI’s models are now mostly pre-trained and not up to date. The last knowledge update for OpenAI’s latest commercial LLM, GPT-4 Turbo, was in April 2023.

“For many enterprise use cases, it’s simply not enough for the AI ​​response to be based on pre-trained data,” Kompella said. “AI responses must contain timely, updated, and often real-time information to be useful.”

Two startups

Founded in 2016 by two former Facebook engineers, Rockset develops a database that includes indexing, SQL support, built-in connectors for data ingestion, and developer tools. Most recently, the vendor added support for vector embedding, allowing users to search and analyze unstructured data.

Rockset had raised a total of $105 million and last raised $44 million in August 2023. Neither company disclosed the value of the acquisition, but the all-stock transaction was reportedly a nine-figure deal.

Members of the Rockset team will join OpenAI, the company said in a blog post.

OpenAI, which began as a nonprofit research lab in 2015, has grown explosively as GenAI technology has taken off and is now a for-profit company valued at over $80 billion.

While the products of vendor GenAI, which also offers the image-generating Dall-E series as well as the multimodal GPT-4o and Sora models, have proven popular with consumers, the company has yet to build a solid corporate customer base.

“The biggest value for OpenAI is its potential to revolutionize data indexing and querying within its platform,” said Mike Leone, an analyst with TechTarget’s Enterprise Strategy Group. “This means OpenAI can improve confidence in answers by providing faster access to larger amounts of data.”

Meanwhile, some see OpenAI’s move as a sign of an emerging trend that could reverse the current paradigm of larger technology providers investing in and acquiring smaller AI startups.

“This is the beginning of a trend. The data companies are moving from data to AI – Snowflake, Databricks, Oracle, Google. Now we’re seeing the AI ​​companies moving towards data,” said Sanjeev Mohan, principal analyst at SanjMo, a data trends consultancy. “At some point, data, analytics and AI will all converge, so we’ll see more of that.”

Rockset customers

According to the provider, Rockset has built up a list of well-known users within just a few years, including Meta, payment provider Klarna and JetBlue.

These companies must now look for a new streaming database provider, such as Materialize or SingleStore.

And soon. In an FAQ on Rockset’s website, the company stated: “Customers who pay monthly or in arrears have until Monday, September 30, 2024 at 5:00 p.m. PDT to opt out.”

“I don’t think this is a good deal for Rockset customers. Rockset customers are done,” Mohan said. “They have to find another database and migrate away from Rockset. It makes me sad that all this technology that was developed by Rockset is now going away.”

However, for companies looking for a GenAI provider, Rockset’s technology could help influence the decision to choose OpenAI.

Despite its high profile and innovative brand reputation, OpenAI is still primarily a consumer-facing company. AI competitors like Google, AWS, Meta, and even OpenAI’s own partner Microsoft have a much larger corporate footprint.

“OpenAI recognizes that the next wave of GenAI innovation is focused on domain-specific enterprise data,” said Kevin Petrie, analyst at BARC US. “Organizations need to organize their multi-structured data in a way that language models and AI models can understand very quickly. Rockset provides those capabilities.”

Shaun Sutner is senior news director of TechTarget Editorial’s information management team, leading coverage of artificial intelligence, unified communications, analytics, and data management technologies. He is a veteran journalist with more than 30 years of news experience.

Senior news editor Eric Avidon contributed to this story.

By Aurora