Microsoft and OpenAI have announced major changes to their artificial intelligence partnership, aimed at giving both companies more independence while continuing their collaboration.
Under the new agreement, Microsoft will hold around 27 percent of OpenAI. This stake is valued at about 135 billion dollars. OpenAI will transition into a public benefit corporation structure. Details were shared in a blog post published by the company.
OpenAI has also agreed to purchase 250 billion dollars worth of Azure cloud services from Microsoft. However, Microsoft will no longer have the first choice to provide compute services for OpenAI.
The deal extends Microsoft’s intellectual property rights for OpenAI’s models and products through 2032.
“As we enter the next phase of this partnership, we have signed a new definitive agreement that builds on our foundation, strengthens our partnership, and sets the stage for long term success for both organisations,” the companies said in a joint statement.
Regulators have given approval for the updated structure.
Microsoft has played a major role in OpenAI’s growth, especially as demand for generative AI has surged globally. Meanwhile, OpenAI, led by CEO Sam Altman, has expanded its collaborations with other technology companies, raising questions about the long term direction of the partnership.
Microsoft first invested 1 billion dollars in OpenAI in 2019 when it was a small research organisation founded in 2015 by well known technology figures including Elon Musk. Microsoft then increased its investment in 2021 and again in January 2023 with a publicly reported 10 billion dollars following the global success of ChatGPT in November 2022.
The partnership has reshaped both companies. OpenAI has grown into one of the world’s highest valued startups. Microsoft has used OpenAI’s technology, now branded as Copilot, across products including Bing search and Office applications.
However, the relationship experienced a difficult moment in November 2023 when OpenAI’s board removed Altman as CEO and later reinstated him after strong employee pushback and support from Microsoft. This highlighted internal concerns over governance and OpenAI’s balance between nonprofit goals and commercial growth.
The new structure is designed to reduce instability and open more opportunities for OpenAI. It will enable the company to work with new partners and make some services available on competing cloud platforms.
“We really think we can now take this technology, this sort of framework we built, and get the whole world to build amazing new companies and services and applications on top of it,” Altman said in an online discussion.
The OpenAI nonprofit will focus its efforts on a 25 billion dollar commitment. This will target disease research and ensure the benefits of generative AI are shared widely while managing related risks.
Microsoft will also have the freedom to continue pursuing artificial general intelligence independently or with other collaborators.
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