Microsoft, once the exclusive provider of cloud infrastructure for OpenAI’s AI models, has updated its partnership terms to allow OpenAI to seek other providers if Microsoft cannot meet its demands- this means that Microsoft is no longer the exclusive Cloud Provider for OpenAI.
The development coincides with OpenAI’s recent announcement of “Stargate,” a large-scale infrastructure deal with SoftBank, Oracle, and other partners. Under this new partnership, Microsoft will still retain the “right of first refusal” for hosting OpenAI’s workloads, but OpenAI is free to approach others if Microsoft’s Azure platform cannot fulfill its needs.
In a statement, Microsoft said: “OpenAI recently made a new, large Azure commitment that will continue to support all OpenAI products as well as training. To further support OpenAI, Microsoft has approved OpenAI’s ability to build additional capacity, primarily for research and training of models.”
The development comes amid reported tensions between the two companies over limited compute resources, which OpenAI blames for delays in product rollouts. In June, Microsoft permitted OpenAI to strike a deal with Oracle to secure additional capacity after pressure from the company’s shareholders.
Despite the changes, Microsoft has affirmed that critical aspects of its partnership with OpenAI still remain intact- these include API exclusivity, shared revenue agreements, and access to OpenAI’s intellectual property till 2030. However, the partnership may face disruption if OpenAI achieves Artificial General Intelligence (AGI).
Under their agreement, once OpenAI’s systems generate $100 billion in profit, Microsoft’s access to its technology could be severed.
OpenAI’s expanded options for cloud infrastructure could potentially weaken Microsoft’s hold as a strategic partner, according to sources. Well, the AI firm is reportedly exploring ways to renegotiate its agreements with Microsoft, possibly in exchange for additional funding.
For now, Microsoft and OpenAI still remain closely linked, but the future of their collaboration will depend on how both parties navigate the structural developments.
Philips Babatunde