Microsoft loosens OpenAI exclusivity

Microsoft and OpenAI rewrote their partnership on April 27, ending Microsoft’s exclusive rights to OpenAI models and sales while keeping Azure in the middle. (blogs.microsoft.com) (openai.com) The new terms say Microsoft remains OpenAI’s primary cloud partner, and new OpenAI products will ship first on Azure unless Microsoft cannot provide the needed capability. OpenAI can now serve all of its products to customers across any cloud provider. (blogs.microsoft.com) (openai.com) Microsoft will keep a license to OpenAI intellectual property for models and products through 2032, but that license is now non-exclusive. Microsoft will no longer pay a revenue share to OpenAI under the revised deal. (blogs.microsoft.com) (cnbc.com) OpenAI will keep paying Microsoft a revenue share through 2030 at the same percentage, subject to a total cap, according to the companies. CNBC, citing a person familiar with the agreement, reported that percentage is 20%. (openai.com) (cnbc.com) The rewrite also removes the old structure in which Microsoft’s rights were tied to whether OpenAI declared it had reached artificial general intelligence, or AGI. CNBC reported Microsoft no longer needs to determine its response to an AGI finding. (cnbc.com) This resets a deal that helped make Azure the main commercial gateway for OpenAI’s models after Microsoft invested more than $13 billion in the startup starting in 2019. Reuters, via CNBC, said the companies had shown strain as each moved onto the other’s turf. (cnbc.com) OpenAI had already signaled that the old arrangement was limiting sales. CNBC reported that OpenAI revenue chief Denise Dresser wrote in an April memo that the partnership had “limited our ability to meet enterprises where they are.” (cnbc.com) The timing also resolves a conflict created by OpenAI’s separate Amazon pact. TechCrunch reported that OpenAI’s up-to-$50 billion AWS deal, announced in February, had raised the risk of a fight with Microsoft under the earlier exclusivity terms. (techcrunch.com) Bloomberg reported the concession from Microsoft was ending its exclusive right to sell OpenAI models, while Microsoft in return stops paying revenue share on OpenAI products it resells on Azure. That gives OpenAI room to pursue cloud distribution with Amazon and other rivals. (bloomberg.com) The partnership is no longer exclusive, but it is not over. Microsoft and OpenAI said the amended deal is meant to give both companies “flexibility” and “long-term clarity” while they keep building AI infrastructure together. (blogs.microsoft.com) (openai.com)