Microsoft and OpenAI Clash Over Artificial General Intelligence in Contract Negotiations

Microsoft and OpenAI dueling over artificial general intelligence, The Information reports

June 25 (Reuters) - Microsoft (MSFT.O), opens new tab and OpenAI are at odds over a contractual provision related to artificial general intelligence, The Information reported on Wednesday. Under the current terms, when OpenAI achieves AGI, Microsoft's access to such a technology would be void. Microsoft wants OpenAI to remove that clause but so far OpenAI has refused, the report said. The report comes at a time when one of the most pivotal partnerships in the field of AI is under strain. 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, according to sources. Microsoft partnered with OpenAI in 2019, investing $1 billion to support the startup's development of AI technologies on its Azure cloud platform. The companies did not immediately respond to Reuters requests for comment. In multiple statements addressing recent media speculation, both have said that discussions are ongoing and they remain optimistic about a long-term partnership. Reporting by Niket Nishant in Bengaluru; Editing by Alan Barona Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

"Nonsensical Benchmark Hacking": Microsoft No Longer Believes OpenAI Is Capable of Achieving AGI

The love's gone bad between Microsoft and OpenAI, whose lucrative partnership ushered in our age of AI hype. OpenAI is trying to convert into a for-profit company, but it's so far failed to secure its benefactor's approval and negotiate a new contract. The frustration is running so high that the ChatGPT maker is reportedly considering bring an antitrust suit against Microsoft if it doesn't get its way. As the Wall Street Journal reports, one thing driving a wedge between them is the industry's favorite buzzword: artificial general intelligence, or AGI. Definitions vary -- part of the reason for the split -- but typically, AGI is imagined as an AI model that reaches or exceeds humanlike intelligence. OpenAI specifically defines it as "highly autonomous systems that outperform humans at most economically valuable work," per the WSJ. The issue is that Microsoft CEO Satya Nadella is apparently pretty skeptical that OpenAI -- or anyone, for that matter -- can achieve this revered milestone, which is a startling vote of no confidence not just from a tech luminary, but from the head of a company that's bought deep into the hype. OpenAI CEO Sam Altman, on the other hand, is an AGI evangelist. In fact, according to WSJ sources, Altman believes that OpenAI is on the verge of being able to declare its AI products have reached AGI levels of proficiency. It's not a purely academic disagreement. The two parties' current contract contains a major clause that states that when OpenAI achieves AGI, the existing partnership ends, the upshot being that Microsoft loses access to OpenAI's future products. That's a dealbreaker for Microsoft: it won't give OpenAI its say-so unless the new contract guarantees exclusive access to OpenAI's technology even after AGI is reached. But again, what really is AGI? How would you define "humanlike" intelligence, and how would you measure it? No one can agree on these finer points, and yet the whole industry reveres this extremely nebulous concept as its end goal and raison dêtre. That pie-in-the-sky thinking can string along wide-eyed investors for a while, but it makes for a pretty fraught contract clause. "Us self-claiming some AGI milestone, that's just nonsensical benchmark hacking," Nadella said on a popular tech podcast in February, as quoted by the WSJ. According to the paper, Nadella's remarks stunned some OpenAI officials, as Nadella was once described by Altman as an "AGI believer." It seems that Microsoft is worried that OpenAI could declare AGI in bad faith. If it does, Microsoft could sue, but that could result in a lengthy legal battle. Preferably, it'd rather just not have the AGI clause at all. Some of its executives never wanted to agree to the clause in the current contract in the first place, according to WSJ sources, believing it was "arbitrary and unenforceable." But Microsoft was so far behind on AI when the contract was negotiated in 2019 that it agreed anyway. The current generation of AI models don't evince a technology that's on the verge of exceeding human intelligence. But OpenAI executives have reportedly discussed the possibility of declaring AGI by releasing an AI coding agent that exceeds the capabilities of an advanced human programmer, per WSJ sources. Should it choose to do so, Open AI could also declare it's achieved "sufficient AGI," meaning that its AI models are capable of generating the maximum profits that Microsoft's investors are entitled to -- a sum equal to, at the time this clause was added when the contract was renegotiated in 2023, roughly $92 billion in future profits, the Information reported. Achieving this would terminate Microsoft's exclusive rights to use OpenAI's tech and allow OpenAI to sell its products through other cloud firms, something it's currently restricted from doing. Notably, OpenAI's model doesn't need to actually generate those profits; it merely needs to be deemed capable of doing so. There are other major points of contention beyond AGI. In general, Microsoft will want what it feels like it's owed: it's invested over $13 billion in the startup and has provided it with the hardware to train and run its AI models. Currently, it already owns the rights to OpenAI's intellectual property, which it uses to help build its own AI offerings like Copilot. But among other things, OpenAI doesn't want Microsoft gaining the rights to a coding startup it (meaning OpenAI) just purchased called Windsurf, which competes with Microsoft's products, according to previous WSJ reporting. (Another point of contention: Microsoft is having trouble selling Copilot to clients, whose workers overwhelmingly prefer ChatGPT.) As part of OpenAI's restructuring into a for-profit, public benefit corporation, Microsoft is also demanding a bigger stake in the company. It may accept 35 percent ownership after recent negotiations, the WSJ reported. And the Information previously reported that OpenAI wants Microsoft to give up its rights to all of OpenAI's future profits in exchange for a 33 percent stake in the new company. OpenAI has depended on Microsoft to provide its compute power and contractually, as mentioned earlier, can only sell its products through Microsoft's Azure cloud services. Lately, however, OpenAI has looked outside the partnership for hardware help, including securing a deal with software giant Oracle, which has agreed to buy $40 billion of Nvidia AI chips to power OpenAI's new US data center. OpenAI also negotiated an agreement with Google to gain access to its vast computing capacity, Reuters reported earlier this month. No doubt that Microsoft will want to keep its coveted access to OpenAI's tech in order to maintain its foothold in the AI race. What's more, the new WSJ reporting indicates that Microsoft is currently restricted from developing AGI on its own under the current contract, which lasts until 2030. But there's major pressure on OpenAI to reach a compromise, too. If it can't complete its restructuring into a for-profit -- itself a major blow -- it could lose out on a staggering $20 billion in funding. All the while, Microsoft could choose to simply walk away from the deal, OpenAI's legal threats be damned.

Microsoft, OpenAI Said to Be Dueling Over Artificial General Intelligence

The companies said they have a long-term, productive partnership Microsoft and OpenAI are at odds over a contractual provision related to artificial general intelligence, The Information reported on Wednesday. Under the current terms, when OpenAI achieves AGI, Microsoft's access to such a technology would be void. Microsoft wants OpenAI to remove that clause but so far OpenAI has refused, the report said. "We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing and we are optimistic we will continue to build together for years to come," OpenAI and Microsoft said in a joint statement emailed to Reuters. The report comes at a time when one of the most pivotal partnerships in the field of AI is under strain. 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, according to sources. Microsoft partnered with OpenAI in 2019, investing $1 billion (roughly Rs. 8,581 crore) to support the startup's development of AI technologies on its Azure cloud platform. © Thomson Reuters 2025

Microsoft and OpenAI dueling over artificial general intelligence: Report

Under the current terms, when OpenAI achieves AGI, Microsoft's access to such a technology would be void. Microsoft wants OpenAI to remove that clause but so far OpenAI has refused, the report said. Microsoft and OpenAI are at odds over a contractual provision related to artificial general intelligence, The Information reported on Wednesday. Under the current terms, when OpenAI achieves AGI, Microsoft's access to such a technology would be void. Microsoft wants OpenAI to remove that clause but so far OpenAI has refused, the report said. "We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing and we are optimistic we will continue to build together for years to come," OpenAI and Microsoft said in a joint statement emailed to Reuters. The report comes at a time when one of the most pivotal partnerships in the field of AI is under strain. 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, according to sources. Microsoft partnered with OpenAI in 2019, investing $1 billion to support the startup's development of AI technologies on its Azure cloud platform.

OpenAI And Microsoft Reportedly At Odds Over Access To Artificial General Intelligence: 'Talks Are Ongoing And We Are Optimistic' - Microsoft (NASDAQ:MSFT)

OpenAI and Microsoft Corporation MSFT are reportedly in a dispute over a contractual clause regarding access to Artificial General Intelligence (AGI). What Happened: The two companies are at odds over a provision in their partnership agreement that would limit Microsoft's access to AGI once OpenAI achieves it, reported Reuters (via The Information). Microsoft has requested that OpenAI remove the clause, but the company has reportedly refused. See Also: Mark Zuckerberg Warns Of 'Serious Disadvantage' As China's Data-Center Blitz Could Let DeepSeek Leapfrog US AI Labs In response to the ongoing talks, both companies gave a joint statement to the publication, saying, "We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing and we are optimistic we will continue to build together for years to come." Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It's Important: Previously, during a New York Times podcast interview, OpenAI CEO Sam Altman addressed rumors of tension with Microsoft, confirming the tech giant remains supportive and that he had a "super nice call" with Satya Nadella. While he acknowledged some friction, he said that the partnership has been mutually beneficial. Last month, it was reported that OpenAI plans to reduce the share of revenue it pays to Microsoft from 20% to 10% by 2030, according to internal financial projections shared with investors. Earlier this month, OpenAI also confirmed that its annualized revenue run rate has doubled to $10 billion, up from $5.5 billion at the end of 2024. This figure excludes Microsoft licensing and large one-time deals, focusing on recurring revenue. ChatGPT now has 500 million weekly active users as of March. Benzinga's Edge Stock Rankings show a positive outlook for Microsoft over the short, medium and long term. Additional detailed metrics are available here. Photo Courtesy: Ascannio On Shutterstock.com Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Cathie Wood Dumps Palantir As Stock Touches Peak Prices, Bails On Soaring Flying-Taxi Maker Archer Aviation Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. MSFTMicrosoft Corp$492.500.05%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum69.65Growth50.54Quality34.07Value13.23Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

OpenAI and Microsoft: a worrying clause

It is perhaps the most iconic partnership in the history of artificial intelligence. And yet it is faltering. The fault lies with a key clause in their agreement, linked to GAI. The acronym refers to General Artificial Intelligence, an AI capable of surpassing humans in all areas, with the potential to acquire all human knowledge and the ability to learn on its own, or even create other, even more powerful AIs. This is how Ilya Sutskever, co-founder of OpenAI, described it during a TED talk. And this is the scenario that Microsoft fears. An explosive clause The agreement between OpenAI and Microsoft stipulates that if a GAI is developed, OpenAI retains the power to decide whether Microsoft will have access to it. This is a provision that the Redmond tech giant wants to remove. But, according to a recent report, OpenAI is opposed to this. How could such a clause have been signed? Did Microsoft's lawyers miss it? Unlikely. Officially, the clause is intended to prevent malicious use of GAI by Microsoft. But as this technology becomes more plausible, Microsoft wants to redefine the terms. Tense dialogue Discussions between both partners are continuing, although the tone is hardening. According to the Financial Times, Microsoft is threatening to suspend negotiations if no common ground is found on sensitive issues, such as its share in OpenAI in the event of an IPO. Meanwhile, OpenAI is reportedly considering denouncing its ally's anti-competitive practices. A story already covered in our columns: The future partnership between Microsoft and OpenAI hangs in the balance. Is a breakup on the cards? The relationship has been fragile for several years. This comes as no real surprise, as it is difficult to be both partners and competitors. The New York Times had already revealed the existence of this controversial clause and the first signs of tension last October. If the divorce goes ahead, it is likely to cause a stir.