OpenAI and microsoft on Monday announced a revised partnership agreement that will allow the artificial intelligence company to cap revenue-sharing payments and serve customers of any cloud provider.
The companies said that as part of the new agreement, revenue sharing payments from OpenAI to Microsoft will be “agretively capped” but will continue through 2030 “irrespective of OpenAI’s technological advances.” Microsoft no longer has to decide what to do if it determines that OpenAI has reached artificial general intelligence (AGI). AGI is a term used to describe AI systems that match or exceed human intelligence.
Revenue sharing between the two companies has been going on for many years. OpenAI will pay the same percentage (20%) to Microsoft as part of the new deal, said a person familiar with the deal who asked not to be identified because the details are confidential. This means, for example, that Microsoft continues to receive a share of all ChatGPT subscription purchases.
Historically, Microsoft has paid OpenAI when users pay for access to OpenAI models through Azure. However, according to a blog post on Monday, Microsoft will no longer pay OpenAI any revenue sharing.
The companies said Microsoft will continue to be OpenAI’s primary cloud provider and that OpenAI products will initially ship on Azure unless Microsoft decides otherwise. However, OpenAI can now offer “all products” to customers from any provider, including: Amazon and google.
Microsoft is one of OpenAI’s longtime supporters, having invested more than $13 billion in the company since 2019. Both companies have continued to tout their partnership as core and strategic, but there have been signs of tension in recent months as one partner moves into the other’s turf. Dennis Dresser, head of revenue at OpenAI, said in a memo earlier this month that the partnership “limited our ability to meet businesses where they are.”
“Today, we are announcing a revised agreement that will simplify the way we partner and collaborate, with a focus on flexibility, certainty, and broadly delivering the benefits of AI,” OpenAI said in a statement.
Microsoft will continue to license OpenAI’s intellectual property related to AI models until 2032, but the license will no longer be exclusive, the companies said.
Microsoft stock fell slightly on Monday.
The renewed partnership comes after Microsoft and OpenAI announced a series of contract changes in October, with OpenAI completing a recapitalization and committing $250 billion to Microsoft’s Azure cloud services. As part of the announcement, Microsoft said it will invest $135 billion in OpenAI’s commercial sector, or about 27% of the company on a diluted basis.
But in the months since then, OpenAI has sought to diversify its reach by inking multibillion-dollar deals with Microsoft competitors such as Amazon. Model developers see customers running AI agents that perform tasks over hours. in the last few weeks meta Pledging to spend $48 billion on cloud providers core weave and Nevius to supplement their own computing power.
Amazon and OpenAI entered into a major strategic partnership in February, with Amazon agreeing to invest up to $50 billion in the company. OpenAI announced it will expand its existing $38 billion contract with Amazon Web Services by $100 billion over the next eight years. AWS will also serve as the exclusive third-party cloud distribution provider for Frontier, OpenAI’s enterprise platform, announced earlier this month.
Following the announcement, Microsoft and OpenAI released a joint statement saying their partnership remains “strong and central.”
Amazon CEO Andy Jassy wrote in a post on X on Monday that AWS plans to move forward and offer OpenAI models to clients through its Bedrock service in the coming weeks.
“This gives builders even more options to choose the right model for the right job,” Jassy wrote, adding that the company will announce details at an event in San Francisco on Tuesday.
—CNBC’s Jordan Novet contributed to this report.
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