Tensions are rising between OpenAI and Microsoft over control, profit-sharing, and cloud hosting rights, as OpenAI pushes for greater independence and a for-profit structure. The fallout from this clash could reshape one of tech’s most high-profile AI partnerships and impact the broader AI industry.
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Cracks are beginning to show in the high-profile AI partnership between OpenAI and Microsoft, as the two tech giants increasingly clash over the direction of their collaboration, the Wall Street Journal has reported.
At the heart of the discord is a growing divergence in ambition. OpenAI, eager to expand and accelerate its growth, reportedly wants greater freedom from Microsoft’s control, particularly when it comes to its AI products and access to computing infrastructure. Crucially, OpenAI is seeking Microsoft’s consent to convert into a for-profit company, a move that could unlock new funding opportunities and a potential public offering.
However, negotiations have been fraught. Sources cited by the WSJ say that tensions have grown so severe
OpenAI executives have discussed a drastic course of action: accusing Microsoft of anticompetitive behaviour. Such a move could involve approaching federal regulators to scrutinise the terms of their contract or launching a public campaign highlighting restrictive practices.
The fallout could endanger what has been one of the most celebrated collaborations in the tech world. Microsoft has played a pivotal role in OpenAI’s rise, providing billions in funding and exclusive access to its cloud infrastructure, in return for early integration of OpenAI’s advanced AI models across its suite of products. Yet, as both companies have matured, they have increasingly found themselves on overlapping paths as competitors in the generative AI race.
The outcome of this power struggle could shape not only the future of OpenAI and Microsoft but also the broader trajectory of the AI industry.
OpenAI needs Microsoft’s approval to complete its transition into a public-benefit corporation. But the two have not been able to agree on details even after months of negotiations, sources said.
The companies are discussing revising the terms of Microsoft’s investment, including the future equity stake it will hold in OpenAI, according to the sources.
Separately, The Information reported that OpenAI wants Microsoft to hold a 33% stake in a restructured unit in exchange for foregoing rights to future profits, citing a person who spoke to OpenAI executives.
The ChatGPT owner wants to modify existing clauses that give Microsoft exclusive rights to host OpenAI models in its cloud, the report added. Microsoft has not agreed to OpenAI’s proposed terms and is reportedly seeking additional concessions from the startup, according to The Information.
“Talks are ongoing and we are optimistic we will continue to build together for years to come,” the companies told Reuters in a joint statement.
Microsoft invested $1 billion in OpenAI in 2019 to support the startup’s development of AI technologies on its Azure cloud platform.
Since then, however, OpenAI has been looking for ways to reduce its reliance on the tech heavyweight. The company plans to add Alphabet’s Cloud service to meet its growing needs for computing capacity, Reuters reported earlier this month.
With inputs from agencies
