OpenAI caps Microsoft revenue share

OpenAI and Microsoft rewrote the commercial terms of their alliance on April 27, loosening one of the tightest pairings in the AI industry. The companies said Microsoft’s license to OpenAI intellectual property is now non-exclusive, OpenAI can serve products across any cloud provider, and revenue-share payments from OpenAI to Microsoft will continue through 2030 subject to a total cap. OpenAI and Microsoft did not disclose the cap in their joint statements. Reuters reported on May 11, citing The Information and a person with knowledge of the arrangement, that the cap is $38 billion. ### When did the old Azure exclusivity actually end? April 27 is the key date. In statements published that day, OpenAI and Microsoft said OpenAI products will still ship first on Azure unless Microsoft cannot or chooses not to support the required capabilities, but OpenAI can now serve all its products to customers across any cloud provider. Microsoft’s license to OpenAI IP, which runs through 2032, also shifted from exclusive to non-exclusive. (openai.com) February 27 shows how material that change was. In a joint statement published then, the companies had said Azure remained the exclusive cloud provider of stateless OpenAI APIs and that any stateless API calls arising from third-party collaborations, including Amazon, would be hosted on Azure. The April 27 amendment replaced that structure with broader distribution rights for OpenAI. ### What exactly was capped at $38 billion? (openai.com) Reuters reported on May 11 that OpenAI agreed to cap the total revenue it shares with Microsoft at $38 billion, citing The Information and a person with knowledge of the arrangement. The April 27 company statements had said only that revenue-share payments from OpenAI to Microsoft would continue through 2030 at the same percentage as before, subject to a total cap. (openai.com) Microsoft also said on April 27 that it will no longer pay a revenue share to OpenAI. That means the revised structure preserves payments flowing from OpenAI to Microsoft through 2030, while ending the reciprocal payment in the other direction. ### What did Microsoft keep in the new deal? 2032 is the end date Microsoft and OpenAI named for Microsoft’s license to OpenAI IP for models and products. The companies also said Microsoft remains OpenAI’s primary cloud partner and that OpenAI products will ship first on Azure, unless Microsoft cannot and chooses not to support the needed capabilities. (finance.yahoo.com) Microsoft remains financially tied to OpenAI beyond the revenue-share line. (openai.com) OpenAI said Microsoft “continues to participate directly” in its growth as a major shareholder, and Reuters noted Microsoft has invested about $13 billion in OpenAI since 2019. ### What changed for customers buying OpenAI through other clouds? OpenAI said on April 27 that it can now serve all its products to customers across any cloud provider. (openai.com) That is the clearest operational change for enterprises that prefer Amazon Web Services, Google Cloud or other infrastructure providers but still want direct access to OpenAI products. February’s statement had already said OpenAI could commit to additional compute elsewhere, including through Stargate, but it kept Azure as the exclusive cloud for stateless APIs. (openai.com) The April amendment goes further by changing both the licensing terms and the customer distribution model. ### Why did the $38 billion figure surface later? May 11 is when the number became public through Reuters’ report on The Information. (openai.com) Neither OpenAI nor Microsoft included the dollar amount in their April 27 announcements, which described the cap but not its size. Reuters said the figure came from a person with knowledge of the arrangement and said it could help OpenAI as it works toward a possible public offering. Reuters also said it could not immediately verify the report independently. (openai.com) 2030 and 2032 are now the dates to watch in the amended partnership. Revenue-share payments from OpenAI to Microsoft run through 2030, while Microsoft’s non-exclusive license to OpenAI IP runs through 2032, according to the companies’ April 27 statements. (openai.com) (finance.yahoo.com)