Microsoft Agrees to End Revenue-Sharing With OpenAI

OpenAI has forged a new revenue and technology agreement with partner/artificial intelligence (AI) competitor Microsoft.

The new arrangement is designed to simplify the way the companies work together, OpenAI said in its announcement Monday (April 27).

“The greater predictability in the amended agreement strengthens our joint ability to build and operate AI platforms at scale while providing both companies the flexibility to pursue new opportunities,” OpenAI said.

Under the new agreement, OpenAI can now serve all of its products to customers of any cloud provider, something the company had long hoped for. Microsoft will stay OpenAI’s primary cloud partner, and OpenAI products will ship first on Azure, “unless Microsoft cannot and chooses not to support the necessary capabilities.”

While Microsoft will continue to have a license to OpenAI IP for models and products through 2032, the company’s license will now be non-exclusive.

Microsoft will continue to serve as a major shareholder in OpenAI, but will no longer pay a revenue share to the startup.

Revenue share payments from OpenAI to Microsoft will proceed through 2030, “independent of OpenAI’s technology progress,” the company said.

Under a previous arrangement, revenue share payments were set to stop and if OpenAI achieved artificial general intelligence (AGI), or a version of AI that can perform at or above the level of humans. The agreement said the determination of whether OpenAI had reached that milestone would be made by a panel of independent experts.

“While this amendment simplifies the partnership, the work we’re doing together remains ambitious,” the companies said.

“From scaling gigawatts of new datacenter capacity, to collaborating on next-generation silicon, to applying AI to advance cybersecurity, and more, we’re excited to keep partnering to advance and scale AI for people and organizations around the world.”

Microsoft has invested more than $13 billion in OpenAI in the last seven years, though their partnership has seen evidence of strain in the last year as they compete with each other.

This month saw a report from CNBC that OpenAI revenue chief Denise Dresser had written in a memo—seen by the network—that the collaboration had “limited our ability to meet enterprises where they are.” She also praised the company’s deal with Amazon, which will see the eCommerce giant invest up to $50 billion in OpenAI.

“Since we announced the partnership at the end of February, inbound demand from our customers for this offering has been frankly staggering,” Dresser wrote.