Microsoft and OpenAI's Partnership Faces Critical Crossroads Amid Restructuring Talks

OpenAI weighs "nuclear option" of antitrust complaint against Microsoft

OpenAI executives have discussed filing an antitrust complaint with US regulators against Microsoft, the company's largest investor, The Wall Street Journal reported Monday, marking a dramatic escalation in tensions between the two long-term AI partners. OpenAI, which develops ChatGPT, has reportedly considered seeking a federal regulatory review of the terms of its contract with Microsoft for potential antitrust law violations, according to people familiar with the matter. The potential antitrust complaint would likely argue that Microsoft is using its dominant position in cloud services and contractual leverage to suppress competition, according to insiders who described it as a "nuclear option," the WSJ reports. The move could unravel one of the most important business partnerships in the AI industry -- a relationship that started with a $1 billion investment by Microsoft in 2019 and has grown to include billions more in funding, along with Microsoft's exclusive rights to host OpenAI models on its Azure cloud platform. The friction centers on OpenAI's efforts to transition from its current nonprofit structure into a public benefit corporation, a conversion that needs Microsoft's approval to complete. The two companies have not been able to agree on details after months of negotiations, sources told Reuters. OpenAI's existing for-profit arm would become a Delaware-based public benefit corporation under the proposed restructuring. The companies are discussing revising the terms of Microsoft's investment, including the future equity stake it will hold in OpenAI. According to The Information, OpenAI wants Microsoft to hold a 33 percent stake in a restructured unit in exchange for foregoing rights to future profits. The AI company also wants to modify existing clauses that give Microsoft exclusive rights to host OpenAI models in its cloud. The restructuring debate attracted criticism from multiple quarters. Elon Musk alleges that OpenAI violated contract provisions by prioritizing profit over the public good in its push to advance AI and has sued to block the conversion. In December, Meta Platforms also asked California's attorney general to block OpenAI's conversion to a for-profit company. Partnership strained as OpenAI sought new cloud providers Last year, the US Federal Trade Commission under the Biden administration began examining the Microsoft-OpenAI partnership in more detail. Microsoft's $13 billion investment in OpenAI prompted competitors like Google to argue that the deal harmed competition by saddling rivals with extra costs and blocking them from hosting OpenAI's latest models themselves, along with what were then Microsoft's exclusive rights to host OpenAI models on its Azure cloud platform. However, Microsoft is no longer OpenAI's exclusive cloud provider as of January, and earlier this month, Reuters reported that OpenAI plans to add Alphabet's Google Cloud service to meet its growing needs for computing capacity, marking a notable collaboration between two AI rivals. The shift came alongside OpenAI's participation in the Stargate Project, a new company that intends to invest $500 billion over the next four years in building new AI infrastructure for OpenAI in the United States. Meanwhile, Microsoft and OpenAI have maintained a public front of cooperation. "Talks are ongoing and we are optimistic we will continue to build together for years to come," they said in a joint statement to Reuters. In January, a Microsoft blog post noted that "key elements" of the partnership remain in place for the duration of their contract through 2030, including revenue-sharing arrangements. Microsoft has the rights to OpenAI IP (including models and infrastructure) for use within products like Copilot through 2030.

The cracks in the OpenAI-Microsoft relationship are reportedly widening | TechCrunch

OpenAI and Microsoft may be reaching an inflection point in their relationship, according to a report from the Wall Street Journal. The report, citing anonymous sources, says OpenAI executives have considered publicly accusing Microsoft of anticompetitive behavior throughout their partnership. OpenAI executives also mulled whether to seek a federal regulatory review of their contract with Microsoft. OpenAI is trying to loosen Microsoft's grip on its intellectual property and computing resources, but the startup also needs the tech giant's approval to complete its for-profit conversion. The two companies are in a standoff over OpenAI's $3 billion acquisition of the AI coding startup, Windsurf. OpenAI doesn't want Microsoft to get Windsurf's intellectual property -- which could enhance the cloud provider's own AI coding tool, GitHub Copilot -- according to the report. While Microsoft was once a major accelerant to OpenAI's growth, the companies' relationship has grown tense. In recent months, OpenAI has reportedly tried to reduce its reliance on Microsoft for cloud services.

Inside Microsoft's complicated relationship with OpenAI

Beyond the selfies between Microsoft CEO Satya Nadella and OpenAI CEO Sam Altman, and the friendly conversations between the pair on stage, all is not well with Microsoft's $13 billion AI investment. Over the past year, multiple reports have painted a picture of a Microsoft and OpenAI relationship that is straining under pressure. As OpenAI battles for access to more compute power and less reliance on Microsoft, tensions have been rising during negotiations over the future of OpenAI's business and its Microsoft partnership. Microsoft backed down on being the exclusive cloud provider for OpenAI earlier this year, but OpenAI still needs Microsoft's approval to convert part of its business to a for-profit company. That's led to a potentially explosive outcome.

Microsoft prepared to walk away from high-stakes OpenAI talks

Microsoft is prepared to walk away from high-stakes negotiations with OpenAI over the future of its multibillion-dollar alliance, as the ChatGPT maker seeks to convert into a for-profit company. The software giant has considered halting complex discussions with the $300bn AI start-up if the two sides remain unable to agree on critical issues, such as the size of Microsoft's future stake in OpenAI, according to people with knowledge of its plans. In this eventuality, Microsoft would rely on its existing commercial contract to retain access to OpenAI's technology until 2030, unless there was an offer that was equal to or better than its current arrangements, according to these people. These people stressed, however, that Microsoft was operating in "good faith" and both parties were meeting daily to try to put a plan on the table and were hopeful a deal could be reached. "We have a long-term, productive partnership that has delivered amazing AI tools for everyone," Microsoft and OpenAI said in a joint statement. "Talks are ongoing and we are optimistic we will continue to build together for years to come." OpenAI needs a deal with Microsoft to complete a move away from its non-profit origins into a more conventional corporate structure, which it believes will unlock funding and launch an initial public offering. Microsoft must approve the switch by the end of the year or OpenAI risks losing billions of funding from other investors, including SoftBank. In discussions over the past year, the two sides have battled over how much equity in the restructured group Microsoft should receive in exchange for the more than $13bn it has invested in OpenAI to date. Discussions over the stake have ranged from 20 per cent to 49 per cent. The pair are also revising the terms of its wider contract, first drafted when Microsoft invested $1bn into OpenAI in 2019. Under its current arrangement, Microsoft has exclusive rights to sell access to OpenAI's models and receives a 20 per cent share of revenues up to $92bn. Microsoft is reluctant to give ground on its continued access to OpenAI's technology or its share of the group's revenues, according to multiple people close to the discussions. The Wall Street Journal reported this week that OpenAI had considered a "nuclear option" of accusing Microsoft of anti-competitive behaviour over its partnership. "Holding out is Microsoft's nuclear option . . . and they are just making OpenAI sweat," said one person close to OpenAI, who also argued access to the ChatGPT maker's IP was necessary for Microsoft to maintain its position in the race to commercialise AI against rivals such as Google and Meta. One person close to Microsoft said the "status quo" was acceptable for the Big Tech company and that it was "happy with the current contract" and prepared to "run it through" until 2030. "The market cares about how much revenue Microsoft is making . . . not about how much equity it owns in OpenAI, [and] this deal moves revenue away from Microsoft," said another person who has discussed the negotiations with Microsoft executives. "The question is, what does Microsoft get in return for giving up the right to that revenue?" Microsoft has already begun diversifying away from OpenAI models in recent months, as part of chief executive Satya Nadella's belief that leading models will become "commoditised" -- or have less value than being able to sell AI-enabled applications and digital assistants built on top of them. In May, the software giant made Elon Musk's xAI model Grok available to its cloud computing customers. "OpenAI is not necessarily the frontrunner anymore," said one person close to Microsoft, remarking on the competition between rival AI model makers. Several other elements of the current contract are also up for negotiation, including Microsoft's exclusive rights to sell OpenAI's software through its Azure cloud computing service; its right of first refusal to provide computing infrastructure to OpenAI; and the software giant's access to the AI group's intellectual property before it reaches "artificial general intelligence". The latter clause refers to a point where OpenAI creates a "highly autonomous system that outperforms humans at most economically valuable work" and is likely to be dropped, as the Financial Times previously reported. OpenAI's chief executive Sam Altman and its chief financial officer Sarah Friar have also said the company is struggling to access the computing power needed to run ChatGPT, which has raced to 500mn weekly active users worldwide, while also training new models and launching products. Two former Microsoft executives involved in managing OpenAI's compute requirements said the relationship between the groups had frayed significantly over the issue, particularly around Altman's demands for faster access to even more infrastructure. Even if the issues are resolved, the transaction will have to be approved by attorneys-general in Delaware and California. The conversion is also subject to a legal challenge from xAI chief Musk, which has been supported by former OpenAI employees. For OpenAI, getting an agreement with Microsoft is crucial. Investors in the AI group's past two financing rounds have agreed to provisions that require the company to successfully convert into a for-profit entity or their equity investment becomes debt. Should this process be delayed or abandoned, investors have the option to claim some of their investment back. SoftBank, which led the most recent round, could cut its $30bn investment by $10bn if the conversion is not completed by the end of the year. People close to OpenAI are confident that investors would retain their commitments, even if the transaction was delayed. A Silicon Valley veteran close to Microsoft said the software giant "knows that this is not their problem to figure this out, technically, it's OpenAI's problem to have the negotiation at all".

Microsoft-OpenAI deadlock could calm capital mania

LONDON, June 20 (Reuters Breakingviews) - Microsoft (MSFT.O), opens new tab boss Satya Nadella nurtured the artificial intelligence arms race. He might accidentally reintroduce some restraint. The technology giant is locked in negotiations over its partnership with cash-burning OpenAI, threatening to walk away unless it gets better terms, the Financial Times reported, opens new tab on Wednesday. A deadlock might help refocus minds. OpenAI CEO Sam Altman is in a bind. Founded as a non-profit years before the potential of chatbots became clear, the ChatGPT developer has since raised vast sums of capital to keep ahead of its rivals, notching a $300 billion valuation. Its current structure caps returns for outside investors. That needs to change: an up-to $40 billion funding round led by SoftBank (9984.T), opens new tab will be trimmed unless the company is reconstituted. Doing so requires the blessing of Microsoft, which has poured $13 billion into OpenAI since 2019, as of October 2024, opens new tab. There are four major sticking points in the talks. First is revenue sharing: OpenAI proposed reducing Microsoft's contractual cut of its revenue by half to 10%, according to The Information, opens new tab. Second, cloud exclusivity. OpenAI grew up depending on Microsoft's cloud unit Azure for computing grunt, with the tech Goliath winning the right to provide future resources. Altman's Stargate data center project is an attempt at independence, but its partner has only waived its rights for a limited amount of additional processing power. Then there's Microsoft's access to OpenAI's intellectual property, set to end if Altman's firm achieves "artificial general intelligence" capable of supplanting humans. The final issue is how much of a reformed OpenAI Microsoft would own, with talks ranging from 20% to 49%, according to the FT. Nadella's team has an advantage, since it can tolerate the status quo. Altman could offer sweeteners like extending Azure's exclusivity or discounting access to new models. Thing is, either could slow OpenAI's path to profitability, already assumed to be four years away. Another option is to give Microsoft a new, senior share class with outsized control. Yet that risks upsetting investors key to OpenAI's future capital needs, particularly SoftBank. A final option: threats. OpenAI has contemplated accusing Microsoft of anticompetitive behavior, the Wall Street Journal reported, opens new tab. If the impasse cannot be resolved, the accidental outcome could be to introduce some restraint. OpenAI - like rivals xAI or Anthropic - is incinerating cash. If access to capital or its eventual profitability is challenged, it might have to pull back. That might not worry Nadella, who argues that AI models will become commoditized. It may, though, send ripples through the wider market, where investors have rushed into over $120 billion of generative AI startup fundraising since 2023, according to PitchBook. Microsoft may indirectly calm this mania, at least a little. Follow Karen Kwok on LinkedIn, opens new tab and X, opens new tab. Context NewsMicrosoft is prepared to abandon its high-stakes negotiations with OpenAI over the future of their alliance, the Financial Times reported on June 18.The technology giant has considered pausing discussions with the ChatGPT maker if the two sides remain unable to agree on critical issues such as the size of Microsoft's future stake in OpenAI, the report said, citing people familiar with the matter.OpenAI and Microsoft in a joint statement provided to Breakingviews 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." Editing by Jonathan Guilford; Production by Pranav Kiran Suggested Topics:Breakingviews Breakingviews Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time. Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors. Karen Kwok Thomson Reuters Karen is a columnist focusing on global technology and venture capital sectors, writing stories about artificial intelligence, fintech, and semiconductor companies. She also covers deals in the Middle East region and global metal mining sector. Prior to Breakingviews, she was a European gas and power reporter at S&P Global Platts in London and covered funds and equities at Morningstar UK. Karen also briefly worked at China Daily Europe and Bloomberg. Born and raised in Hong Kong, she is fluent in Mandarin and Cantonese.

OpenAI and Microsoft Execs Reportedly Considering the 'Nuclear Option'

OpenAI and Microsoft like to present themselves as the power couple of Silicon Valley, but behind closed doors, it's looking increasingly like a distraught and loveless marriage. The two companies, which are bound together by cash flows and an entwined product base, have been undergoing a turbulent negotiation surrounding OpenAI's desire for a shorter leash and the opportunity to turn itself into a for-profit company. Microsoft appears to be resistant to some of those goals. Now, a new report claims that the staff at OpenAI have prepped a "nuclear option," in case the negotiations do not go the way they want them to. The Wall Street Journal reports that OpenAI may run to the federal government and accuse Microsoftâ€"its own sugar daddyâ€"of anti-competitive practices. Were this to happen, OpenAI execs claim they would seek a federal regulatory review of the terms of the contract between them and Microsoft, with an eye towards identifying potential antitrust violations. For Microsoft, calling in the antitrust cops could be the most extreme form of betrayal that exists. It's been down that road, picked up the pieces, and become a very different company in the meantime. OpenAI might also launch a media campaign to air the duo's dirty laundry in public. The two companies have a quite unique relationship that could make such a conflict particularly disastrous. Microsoft doesn’t own OpenAI outright, and the startup isn’t technically beholden to the software giant. But Microsoft provides the cloud computing infrastructure necessary to fuel OpenAI’s tools, and Microsoft earns a large percentage of OpenAI’s profits until the startup repays Microsoft’s initial investments. After the initial investment is paid, Microsoft will retain a large stake in the company and earn a certain percentage of OpenAI’s profits until it hits a cap. But again, because it’s not technically owned by Microsoft, OpenAI is still (technically) its own organization. OpenAI's effort to become a for-profit company is presumably pivotal to its long-term growth strategyâ€"a strategy that could be strangled if Microsoft holds onto it too tightly. The Journal notes that much of the strife between the two companies seems to revolve around Microsoft's continued ownership over large parts of OpenAI's business: The companies continue to be at odds over how much of OpenAI Microsoft would own if it converts into a public-benefit corporation. Microsoft is currently asking for a larger stake in the new company than OpenAI is willing to give, people familiar with the matter said. OpenAI has to complete the conversion by the end of the year, or it risks losing $20 billion in funding. Were OpenAI to actually turn on Microsoft, the resultant corporate battle could be one for the agesâ€"a truly ugly mud fight between two of the most influential companies in Silicon Valley. It's not clear whether we're at that stage yet, however. “We have a long-term, productive partnership that has delivered amazing AI tools for everyone,†representatives for the two companies told the Wall Street Journal in a joint statement. “Talks are ongoing, and we are optimistic we will continue to build together for years to come.†Gizmodo reached out to OpenAI and Microsoft for more information.

Microsoft's OpenAI partnership is fraying at the seams

Why it matters: Microsoft has injected billions of dollars in OpenAI and made it a cornerstone of its AI strategy, but the companies have also remained rivals that, in many cases, offer competing AI services. State of play: The two companies have been in talks for months to amend their partnership, with OpenAI needing approval from Microsoft to move forward with the corporate restructuring it has promised recent investors it would make. Driving the news: The Wall Street Journal reported Monday that tensions have escalated between the two companies, with OpenAI considering a "nuclear option" of accusing Microsoft of violating antitrust laws. Zoom in: The latest sticking point is over whether Microsoft would have access to the intellectual property behind Windsurf, the coding startup OpenAI reportedly acquired last month. Zoom out: Ultimately, there are far larger issues at play than whether Microsoft has access to Windsurf's technology. OpenAI needs Microsoft's go-ahead for a restructuring that OpenAI wants to achieve soon in order to meet commitments it made to recent investors. That means translating Microsoft's current share of OpenAI profits, up to a certain point, into a specific stake in the company. Between the lines: There's a lot at play here and plenty of potential sticking points. Yes, but: Both companies are also eager to show each other -- and the world -- that they have alternative plans and are ready to play rough if need be. Microsoft has been expanding its own bench of AI talent, from its deal to bring in Mustafa Suleyman to the more recent move tapping Jay Parikh as head of a Core AI unit. OpenAI, which once got all its compute capacity from Microsoft, has moved to diversify, first with its Stargate project with Oracle and SoftBank and more recently in a deal with Google to use its cloud as well. What they're saying: "We have a long-term, productive partnership that has delivered amazing AI tools for everyone," the companies said in a joint statement. "Talks are ongoing and we are optimistic we will continue to build together for years to come."

OpenAI weighs antitrust action against Microsoft, report says

Tensions between executives at OpenAI and Microsoft have reached a boiling point, with those on OpenAI's side weighing whether to accuse Microsoft of anticompetitive behavior. That's the picture that emerges from a Wall Street Journal report published Tuesday. The report details mounting frustration inside OpenAI as negotiations drag on over the future of the two companies' AI partnership, including how big a stake in OpenAI Microsoft would receive if the ChatGPT maker converts into a public-benefit company (a for-profit company with both business and social goals). Such a conversion is crucial for OpenAI's ambitions to raise more funding and potentially go public. But that's also the very pricey sticking point. If OpenAI doesn't accomplish the conversion by the end of the year, a lead investor, SoftBank, may withdraw $20 billion in funding. And OpenAI's ability to pull off the conversion hinges on Microsoft's blessing, per the current agreement. OpenAI has taken no official action, but that it's been discussed is in some ways enough: a whiff of war in the air. An anticompetitive accusation and public campaign would be likely to seriously alter what's become one of the tech world's most important and prominent partnerships. Microsoft first invested $1 billion in OpenAI in 2019, with the original announcement painting the partnership in idealistic tones. Microsoft and OpenAI pledged to jointly develop "a computational platform in Azure of unprecedented scale," one that would train and run ever more advanced AI models. The companies said the project would reflect their "shared principles on ethics and trust" -- a line that now reads with an iota of irony as the partnership strains under the weight of multi-billion-dollar disputes and competing ambitions. In all, the original announcement refers to "trust" and "trustworthiness" four different times. The dispute also touches on a longer-term rift: Microsoft wants access to OpenAI's technology even after it reaches "humanlike intelligence," a milestone that would terminate the current agreement. In a joint statement to WSJ, the companies said talks are ongoing and characterized the partnership as "productive." A high-stakes tech alliance like theirs could hardly fail to be contentious, too, with so much risk and reward in play.

There's Explosive Drama Between OpenAI and Microsoft

The partnership that ushered in our age of AI is showing some major cracks. As the Wall Street Journal reports, OpenAI wants its longtime patron Microsoft to loosen its control on its AI products, while also seeking Microsoft's approval to let it become a for-profit company, which OpenAI has been planning for a while now. But the negotiations have turned ugly. And OpenAI is so frustrated with its benefactor that behind the scenes, executives are considering the "nuclear option": going to court and accusing Microsoft of anticompetitive practices, according to the reporting. That could bring down a review by federal regulators and a public campaign railing against the tech monolith. An antitrust investigation is something that Microsoft has been paranoid about: as Reuters notes, it gave up a board observer seat at OpenAI last year to get US and UK antitrust regulators off its back. It's a stunning breakdown in a relationship that's proven to be one of the most lucrative in tech history, per the WSJ. OpenAI arguably wouldn't be where it is without Microsoft's initial $1 billion investment back in 2019. And Microsoft wouldn't be able to cash in on the AI race -- nor enjoy its considerable head start -- without the breakout success of ChatGPT, a name that has become synonymous with AI itself. Like certain sparring couples, the pair are still publicly insisting that they're getting along famously. "We have a long-term, productive partnership that has delivered amazing AI tools for everyone," spokespersons for the two companies said in a joint statement, per the WSJ. "Talks are ongoing and we are optimistic we will continue to build together for years to come." There's a lot on the line here. Microsoft benefits from having the rights and access to OpenAI's intellectual property, which it integrates into its own AI offerings like Copilot. OpenAI received heavy investment from the Redmond giant, which became the lifeblood of the company. Both are locked into a revenue-sharing agreement, though OpenAI has recently moved to decrease what it shares with its partner. One point of contention is OpenAI's $3 billion acquisition of the coding startup Windsurf, according to the WSJ's sources. OpenAI doesn't want Microsoft, which has its own AI coding tool called GitHub Copilot that competes with OpenAI, to have access to Windsurf's IP -- which again, under their current agreement, Microsoft technically would have the rights to. Another is OpenAI's lengthy endeavor to become for-profit by converting into a public-benefit corporation. Microsoft isn't against the move, but it's reportedly asking for an even bigger stake in the would-be corporation that OpenAI won't even countenance. The pressure's on OpenAI to complete the restructuring, because if it doesn't by the end of the year, it could lose out on an astonishing $20 billion in funding, notes the WSJ. Shortly prior to the paper's reporting, The Information reported that OpenAI wants Microsoft to relinquish its rights to all of OpenAI's future profits in exchange for a 33 percent stake in the new company. Further down the line, the current partnership is supposed to end if OpenAI ever achieves artificial general intelligence, or AGI, meaning a powerful AI that rivals or exceeds human levels of intelligence. It's not clear if this is even possible, let alone if it could be achieved any time soon, but Microsoft is reportedly demanding it keep its access to OpenAI's products even after this milestone, in what OpenAI sees as breaking the terms of the agreement. Cracks have shown elsewhere before this latest escalation. On top of benefiting from its investment, OpenAI has historically depended on Microsoft to supply the vast computing power necessary to train and run its AI models. But OpenAI has started to court others to fill this role as part of its massive Stargate Project, including software giant Oracle, which has agreed to buy $40 billion of Nvidia AI chips to power OpenAI's new US data center. OpenAI has even clinched a deal with Google to gain access to its vast computing capacity, Reuters reported last week. We'll have to see how this shakes out -- but we're not necessarily anticipating a chummy conclusion. More on OpenAI: Sam Altman Says "Significant Fraction" of Earth's Total Electricity Should Go to Running AI

OpenAI May Have Screwed Up So Badly That Its Entire Future Is Under Threat

In its quest to become a for-profit entity, OpenAI may have catastrophically fumbled the bag with its patron Microsoft. As the Financial Times reports based on insider interviews, Microsoft is ready to walk away from the frustrating negotiations with OpenAI as both parties seek to renew their partnership amid the latter's for-profit push. Earlier in the week, the Wall Street Journal revealed the increasing tensions between Microsoft and OpenAI about whether the larger company will even allow the smaller to go for-profit at all. Along with OpenAI seeking Microsoft's blessing in its battle for profit -- a push that has already proven legally problematic -- the FT's reporting indicates that one of the chief sticking points between the two is the size of Microsoft's future investments in OpenAI, potentially hobbling the latter's endless quest for growth. According to the FT's unnamed insiders, representatives from the David-and-Goliath tech duo have been meeting daily to try to pin down a deal that would satisfy both. In exchange for its massive investment in the AI company, per this new reporting, Microsoft has battled for the better part of the year to get up to 49 percent of OpenAI's revenues -- up from the 20 percent it gets right now under the terms of the current deal. "We have a long-term, productive partnership that has delivered amazing AI tools for everyone," OpenAI and Microsoft said in a joint statement to the WSJ earlier in the week. "Talks are ongoing and we are optimistic we will continue to build together for years to come." That terse statement belies the reportedly explosive tension between the companies, which has apparently gotten so near a boiling point that OpenAI is considering a "nuclear option": taking Microsoft to court for allegedly engaging in anticompetitive practices, per the WSJ.

Why OpenAI and Microsoft's AI partnership might be headed for a breakup

Microsoft has been one of OpenAI's biggest backers over the past three years, as OpenAI's flagship product, ChatGPT, has steadily embedded itself into our lives. But the multibillion-dollar relationship now appears to be on shaky ground, with rumors that OpenAI might file an antitrust complaint against the Windows-maker in an attempt to wriggle out of a longstanding agreement between the two companies. The relationship, which began with Microsoft's $1 billion investment in OpenAI in 2019 -- and has since grown to include more than $10 billion in total funding -- is built on Microsoft's entitlement to 49% of OpenAI Global LLC's profits, capped at roughly 10 times its investment. For years, the partnership has remained stable. When Sam Altman was briefly ousted as OpenAI CEO in November 2023, Microsoft remained steadfast in its support of the company. But recent events appear to have strained the relationship -- specifically, a new deal OpenAI has made. OpenAI's pending acquisition of AI coding startup Windsurf -- valued at $3 billion -- has pushed its partnership with Microsoft to the brink. Reports suggest that OpenAI executives have threatened an antitrust complaint if Microsoft insists on full access to Windsurf's intellectual property after the deal closes. At the same time, Microsoft is reportedly uneasy about the prospect of OpenAI developing a competing Copilot product.

The Microsoft-OpenAI alliance could fracture

OpenAI is reportedly considering a formal complaint against Microsoft alleging anti-competitive practices, according to The Wall Street Journal. The move, described as a "nuclear option," comes amid negotiations over OpenAI's desire to become a for-profit entity. OpenAI executives have reportedly considered requesting a federal regulatory review of their contract with Microsoft, with the aim of identifying potential antitrust violations. An additional contingency plan involves a media campaign. These actions are under consideration as OpenAI seeks greater autonomy despite Microsoft's significant financial and infrastructural support. Microsoft provides the cloud computing infrastructure crucial for OpenAI's operations. As part of their existing agreement, Microsoft receives a substantial share of OpenAI's profits until its initial investments are recouped. Following this, Microsoft will maintain a significant stake in the company and continue to earn a percentage of OpenAI's profits up to a specified limit. OpenAI remains technically independent. Future of Microsoft OpenAI pact uncertain says report Central to the dispute is the extent of Microsoft's ownership stake in a potential for-profit version of OpenAI, which needs to complete the conversion by year's end to secure $20 billion in funding. The Wall Street Journal reports that Microsoft is seeking a larger stake than OpenAI is willing to concede. "We have a long-term, productive partnership that has delivered amazing AI tools for everyone," representatives for OpenAI and Microsoft stated jointly to The Wall Street Journal. They added, "Talks are ongoing, and we are optimistic we will continue to build together for years to come."

Is Microsoft blocking OpenAI's next move?

Microsoft and OpenAI's partnership faces uncertainty as reports indicate Microsoft may abandon negotiations regarding OpenAI's transition into a for-profit entity. The potential departure stems from disagreements over anticompetitive business practices and Microsoft's desired share in OpenAI's Public Benefit Corporation (PBC). Should Microsoft choose to end negotiations, it will continue its current partnership with OpenAI, set to expire in 2030. This arrangement allows Microsoft early access to OpenAI's AI technology in exchange for computing power and funding. Despite the uncertainty, sources close to Microsoft maintain that the company hopes to reach a mutually beneficial agreement with OpenAI. Another source indicated satisfaction with the existing contract, stating, "The market cares about how much revenue Microsoft is making . . . not about how much equity it owns in OpenAI, [and] this deal moves revenue away from Microsoft." Microsoft CEO Satya Nadella has stated, "Every day that ChatGPT succeeds is a fantastic day for Microsoft," noting that Microsoft profits from each use of ChatGPT. Computing power has become a point of contention, with OpenAI CEO Sam Altman claiming that Microsoft's resource allocation could hinder OpenAI's progress in the AGI race. Altman has also stated that OpenAI faces no compute constraint. Altman says Meta offered $100M to transfer OpenAI staff OpenAI has unveiled the $500 million Stargate project to address its increasing computing requirements. Earlier reports suggested that Microsoft withdrew from two data center deals to avoid supporting additional ChatGPT training. Microsoft's AI CEO, Mustafa Suleyman, revealed the development of its own AI models, anticipating a 3 to 6 month delay compared to OpenAI. Microsoft has begun testing third-party AI models in Copilot, responding to complaints that GPT-4 is too expensive and slow. The core of the disagreement reportedly centers around intellectual property rights following OpenAI's interest in acquiring Windsurf, an AI-powered coding tool for $3 billion. This acquisition has raised concerns about potential conflicts with Microsoft's GitHub Copilot. A source with ties to OpenAI claims Microsoft is delaying OpenAI's for-profit transition to maintain its lead in the AI sector. The person added, "Holding out is Microsoft's nuclear option . . . and they are just making OpenAI sweat." OpenAI is expected to transition into a for-profit entity by the end of this year. Failure to reach an agreement with Microsoft could jeopardize billions in investor funding and expose the company to potential hostile takeovers.

Tensions Are Flaring Between Microsoft and OpenAI

According to new reporting from The Information and The Wall Street Journal, the two companies have been negotiating for more than eight months regarding issues of ownership, profit-sharing, and exclusivity. Here's the context: OpenAI is attempting to convert from a non-profit into a for-profit public benefit corporation (also known as a B Corp). According to The Information, OpenAI wants Microsoft, by far its largest investor, to only have a 33 percent ownership stake in the company. The same report alleges that OpenAI also wants to alter terms that give Microsoft exclusive rights to resell OpenAI's API in the cloud, and prevent Microsoft from getting access to AI code editor Windsurf, which OpenAI is currently in the process of acquiring. In 2019, years before the debut of ChatGPT, Microsoft invested $1 billion in OpenAI as part of a deal that gave the Bill Gates-founded company exclusive rights to resell OpenAI's API in its Azure cloud computing platform. In total, Microsoft has invested over $13 billion in OpenAI. According to a January 2025 blog post, OpenAI and Microsoft's contract will expire in 2030. Other cloud computing providers, like Google and Amazon, would likely jump at the chance to resell OpenAI's popular models.

OpenAI Executives Weighing Antitrust Accusation Against Microsoft: Report

Microsoft has exclusive rights to host OpenAI models in its cloud OpenAI executives have considered accusing Microsoft, the company's major backer, of anticompetitive behavior in their partnership, the Wall Street Journal reported on Monday, citing people familiar with the matter. OpenAI's effort could involve seeking a federal regulatory review of the terms of its contract with Microsoft for potential violations of antitrust law, as well as a public campaign, the report said. Such a move could unravel one of the most pivotal tech partnerships in the fast-growing field of Artificial Intelligence (AI). 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 percent 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 (roughly Rs. 8,608 crore) 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 Google Cloud service to meet its growing needs for computing capacity, Reuters reported earlier this month. © Thomson Reuters 2025

Microsoft Said to Be Prepared to Abandon High-Stakes Talks with OpenAI

Microsoft has considered pausing discussions with ChatGPT Microsoft is prepared to abandon its high-stakes negotiations with OpenAI over the future of its alliance, the Financial Times reported on Wednesday. The tech giant has considered pausing discussions with the ChatGPT maker if the two sides remain unable to agree on critical issues such as the size of Microsoft's future stake in OpenAI, the report said, citing people familiar with the matter. The company plans to rely on its existing commercial contract to maintain access to OpenAI's technology until 2030, according to the FT report. Microsoft and OpenAI did not immediately respond to Reuters' requests for comment on the report. OpenAI executives have considered accusing Microsoft of anticompetitive behavior in their deal, the Wall Street Journal reported on Monday, adding that both the companies are discussing revising the terms of Microsoft's investment, including the future equity stake it will hold in the AI startup. "Talks are ongoing and we are optimistic we will continue to build together for years to come," the companies said in a statement in response to the WSJ report. Microsoft's multi-billion dollar investments into OpenAI has been a key factor in positioning it as a leading player in the artificial intelligence space. OpenAI requires approval from Microsoft, its major backer, to complete its transition into a public-benefit corporation, which it believes will make it easier to raise more capital. © Thomson Reuters 2025

OpenAI executives have discussed accusing Microsoft of anticompetitive behavior: Report

Executives at OpenAI have discussed accusing the company's major backer, Microsoft, of anticompetitive behavior during their partnership, the Wall Street Journal reported on Monday, citing people familiar with the matter. OpenAI's effort could involve seeking a federal regulatory review of the terms of its contract with Microsoft for potential violations of antitrust law, as well as a public campaign, the report said. Such a move could unravel one of the most pivotal tech partnerships in the fast-growing field of artificial intelligence. 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. "Talks are ongoing and we are optimistic we will continue to build together for years to come," representatives for the two companies told the WSJ in a joint statement. They did not immediately respond to Reuters requests for comment. Microsoft invested $1 billion in OpenAI in 2019 to support the startup's development of AI technologies on its Azure cloud platform. The early bet gave it a front-row seat in the AI race and helped propel both companies to the forefront of the industry. Since then, however, OpenAI has been looking for ways to reduce its reliance on the tech heavyweight. The company plans to add Alphabet's Google Cloud service to meet its growing needs for computing capacity, Reuters reported earlier this month. Microsoft has also been laying the groundwork for greater independence. It has been working on adding internal and third-party AI models to power its flagship AI product, Microsoft 365 Copilot, which relies heavily on OpenAI, Reuters reported last year. Previous regulatory concerns have already prompted Microsoft to make concessions. Last year, it gave up its board observer seat at OpenAI to address antitrust scrutiny in the U.S. and the UK over its influence on the startup.

Microsoft prepared to abandon high-stakes talks with OpenAI, FT reports

OpenAI executives have considered accusing Microsoft of anticompetitive behavior in their deal, the Wall Street Journal reported on Monday, adding that both the companies are discussing revising the terms of Microsoft's investment, including the future equity stake it will hold in the AI startup.Microsoft is prepared to abandon its high-stakes negotiations with OpenAI over the future of its alliance, the Financial Times reported on Wednesday. The tech giant has considered pausing discussions with the ChatGPT maker if the two sides remain unable to agree on critical issues such as the size of Microsoft's future stake in OpenAI, the report said, citing people familiar with the matter. The company plans to rely on its existing commercial contract to maintain access to OpenAI's technology until 2030, according to the FT report. Microsoft and OpenAI did not immediately respond to Reuters' requests for comment on the report. OpenAI executives have considered accusing Microsoft of anticompetitive behavior in their deal, the Wall Street Journal reported on Monday, adding that both the companies are discussing revising the terms of Microsoft's investment, including the future equity stake it will hold in the AI startup. "Talks are ongoing and we are optimistic we will continue to build together for years to come," the companies said in a statement in response to the WSJ report. Microsoft's multi-billion dollar investments into OpenAI has been a key factor in positioning it as a leading player in the artificial intelligence space. OpenAI requires approval from Microsoft, its major backer, to complete its transition into a public-benefit corporation, which it believes will make it easier to raise more capital.

Trouble between AI's power couple: What's brewing between Microsoft and OpenAI?

OpenAI needs Microsoft's approval to complete its transition into a public-benefit corporation. But sources told Reuters the companies have not been able to agree on details even after months of negotiations. Tensions have risen between the two sides after reports emerged that OpenAI is considering a "nuclear option", accusing Microsoft of anticompetitive behaviour.The biggest partnership in the artificial intelligence (AI) world, between Microsoft and OpenAI, is showing signs of cracks. Microsoft invested $1 billion in the ChatGPT maker in 2019, ahead of the generative AI boom. The companies then rode the wave to the top, with the software maker injecting billions more in the company in the following years. But then disagreements arose over controlling AI technology and computing resources, intellectual property rights, as well as OpenAI's organisational transition plans and competitive tensions. These issues have made the once-close partnership shaky, and may fundamentally change it. What's happened? OpenAI needs Microsoft's approval to complete its transition into a public-benefit corporation. But sources told Reuters the companies have not been able to agree on details even after months of negotiations. Tensions have risen between the two sides after reports emerged that OpenAI is considering a "nuclear option", accusing Microsoft of anticompetitive behaviour. The companies are discussing revising the terms of Microsoft's investment, including the future equity stake it will hold in OpenAI, the report said, adding that the ChatGPT owner wants to modify existing clauses that give Microsoft exclusive rights to host OpenAI models in its cloud. Reuters reported that Microsoft was even ready to walk away from its high-stakes negotiations with OpenAI over the future of its alliance. Windsurf issue The key issue in the dispute is now Microsoft's access to OpenAI's intellectual property. OpenAI even wanted to exclude Microsoft's access to AI coding startup Windsurf, which it had acquired, due to competing products. OpenAI acquired Windsurf, an AI-assisted coding tool formerly known as Codeium, for about $3 billion, marking the company's largest acquisition to date. Microsoft-owned Github offers a competing AI tool for programmers. Investors have also poured money into a new crop of startups offering similar tools, including Anysphere, the startup behind Cursor. Analysts have said that the partnership between the legacy giant and the AI startup was always unstable, with Microsoft testing alternatives and preparing for a way forward without OpenAI.

OpenAI Vs. Microsoft? Inside The Brewing Power Struggle That Could Reportedly Explode Into An Antitrust Showdown - Microsoft (NASDAQ:MSFT)

The relationship between OpenAI and Microsoft Corporation MSFT is becoming increasingly strained, with OpenAI reportedly contemplating a drastic move in the ongoing negotiations. What Happened: OpenAI is exploring the option of accusing Microsoft of anticompetitive practices -- a step that could potentially strain their long-standing partnership, reported The Wall Street Journal on Monday. This potential move might include requesting a federal regulatory review of their contract terms for possible antitrust violations, along with launching a public campaign, The negotiations have entered a pivotal stage, with OpenAI reportedly aiming to reduce Microsoft's influence over its AI products and access to computing resources, but Microsoft's consent is pivotal for OpenAI's transition into a for-profit entity, a change that could facilitate increased fundraising and a potential public listing. OpenAI and MSFT did not immediately respond to Benzinga's request for comment. SEE ALSO: Trump Asks 'Everyone' To Immediately Evacuate Tehran, Odds Of US Striking Iran Spike On Crypto Betting Platform Why It Matters: Microsoft, once a key driver of OpenAI's early growth in return for priority access to its technology, has now emerged as a rival -- adding complexity to ongoing negotiations. The two companies are also in disagreement over the stake Microsoft would hold if OpenAI transitions into a public-benefit corporation. In May, OpenAI was reportedly in high-stakes negotiations with Microsoft to revise the terms of their multibillion-dollar partnership. A key point of contention was the amount of equity Microsoft would receive in the restructured OpenAI entity in exchange for its over $13 billion investment to date. OpenAI's future as a for-profit company is also closely tied to its relationship with Microsoft. The company's Texas data center expansion was seen as a move to reduce its dependence on Microsoft's computing resources. Later in June, Microsoft integrated OpenAI's Sora model into its Bing app, bringing generative video tools to everyday users. This move came after Google's Veo 3 video AI made headlines, highlighting the competitive landscape of the AI industry. OpenAI's potential transition into a public-benefit corporation and its IPO ambitions have been a focal point of the negotiations with Microsoft. The outcome of these discussions will shape the future of their partnership and the broader AI industry. On a year-to-date basis, Microsoft stock surged 14.47%, according to data from Benzinga Pro. READ MORE: Elizabeth Warren Says Billionaires Like Jeff Bezos And Elon Musk Will 'Track Your Purchases' If Allowed To Launch Stablecoins, And Stick You With The Bill When It 'Blows Up' Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. MSFTMicrosoft Corp$475.11-0.84%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum63.80Growth51.62Quality38.28Value13.41Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

OpenAI Considered Antitrust Accusation Against Microsoft: Report

The most famed bromance between OpenAI and Microsoft is reportedly under severe tension. Microsoft is OpenAI's closest partner and has invested billions of dollars into the hot AI startup. Along with that, Microsoft has provided Azure cloud infrastructure for the past six years to train AI models and provide inference. Now, a new report says that OpenAI considered an antitrust complaint against Microsoft. According to people familiar with the matter told The Wall Street Journal that in recent weeks "OpenAI's executives have discussed what they view as a nuclear option: accusing Microsoft of anticompetitive behavior during their partnership." Not only that, OpenAI may seek "federal regulatory review of the terms of the contract for potential violations of antitrust law, as well as a public campaign." If the report turns out to be true, it would be a huge setback for the AI industry. Microsoft has backed OpenAI from the very beginning with financial resources and cloud infrastructure support. Microsoft's backing has allowed OpenAI to flourish and train frontier AI models. In return, Microsoft has been getting access to OpenAI's latest AI technologies. OpenAI and Microsoft are clashing over OpenAI's $3 billion acquisition of Windsurf, a coding AI assistant that competes with Microsoft's GitHub Copilot. Under the current agreement, Microsoft has access to all of OpenAI's IP (intellectual property). Now, Microsoft wants the same access to Windsurf's IP, but OpenAI is resisting this move. Besides that, OpenAI dropped its plan to become a for-profit company; however, the company has said that its for-profit LLC will transition to a Public Benefit Corporation (PBC). Now, Microsoft wants a larger stake in the PBC, but OpenAI is again unwilling to give. According to The Information, OpenAI is willing to give a 33% stake in the new company, but Microsoft has to end the Azure exclusivity agreement, give up its future profit rights, and exempt Windsurf from IP rights. OpenAI has to complete the transition by year's end or it may lose nearly $20 billion in funding. To the Journal's reporting, Microsoft and OpenAI responded in a joint statement: "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." The recent report by the Journal is in line with earlier reports which indicate that OpenAI's relationship with Microsoft has strained considerably. Last year, we reported that Microsoft AI chief Mustafa Suleyman yelled at OpenAI employees over the delayed transfer of AI technologies. The report said that OpenAI views Microsoft as a competitor and wants greater independence from the tech giant. In fact, OpenAI was considering using the AGI clause which says that if OpenAI achieves AGI internally, it will stop sharing AI advancements with Microsoft. However, Microsoft wants access to OpenAI's AI models even after the startup achieves AGI (Artificial General Intelligence). OpenAI is also looking beyond Microsoft for cloud resources. In June last year, Microsoft allowed OpenAI to purchase cloud resources from Oracle. The agreement said that OpenAI must use Microsoft Azure for all its cloud needs. And now, Reuters reports that OpenAI is partnering with Google to use the Google Cloud infrastructure to meet the consumer demand. Increasingly, OpenAI is trying its best to reduce its dependency on Microsoft. And Taiwanese media reports that OpenAI may start using its ASIC chip for AI training by the end of this year. The chip has been designed by Broadcom and manufactured on TSMC's 3nm process node. Finally, in 2025, OpenAI announced The Stargate Project along with Oracle, Softbank, and MGX to build a mega AI factory for training and inference. Interestingly, Microsoft was absent from the announcement. It's quite evident that OpenAI is preparing for the future, and the startup doesn't want Microsoft in it.

Microsoft May Walk Away from Negotiations with OpenAI: Financial Times

As tensions rise between the two companies, OpenAI's planned transition to a Public Benefit Corporation (PBC) may be at risk. OpenAI and Microsoft have had the most successful alliance in tech history, but it appears the relationship is lately going through growing tensions. After The Wall Street Journal reported on Monday that OpenAI considered accusing Microsoft of anticompetitive behavior and bringing the matter to regulators, Microsoft has fired back by saying that it may exit talks with OpenAI. According to the Financial Times, Microsoft could walk away from negotiations with OpenAI if the AI startup doesn't agree to Microsoft's larger equity stake in OpenAI. Microsoft is pushing to keep the current commercial agreement until 2030, according to people familiar with the matter. As OpenAI is planning to convert its for-profit LLC into a Public Benefit Corporation (PBC), Microsoft wants a larger stake in the company. Without Microsoft's approval, OpenAI can't complete the transition, which will prevent OpenAI from raising more funds. OpenAI has to complete the transition by the year's end. We reported earlier that OpenAI considered an antitrust complaint against Microsoft and mulled federal regulatory review of the terms of the contract. According to The Information, OpenAI is willing to offer a 33% stake in the company, but Microsoft is seeking a larger stake. Not to mention, OpenAI also wants Microsoft to end the Azure exclusivity agreement and seeks to exempt the tech giant from accessing Windsurf's IP rights.

Report: OpenAI Executives Discussed Accusing Microsoft of Anticompetitive Behavior | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. The tensions center in part on whether Microsoft would have access to the intellectual property of Windsurf, if OpenAI acquires that coding startup, and how big Microsoft's share of OpenAI would be if OpenAI converts into a public-benefit corporation, the Wall Street Journal (WSJ) reported Monday (June 16), citing unnamed sources. Asked about the report by the WSJ, the companies told the publication in a joint statement: "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." The reported dispute over the intellectual property of Windsurf came about because the agreement between the two companies provides Microsoft with access to all of OpenAI's intellectual property (IP), but because they have competing products for coding, OpenAI does not want Microsoft to have access to the IP of Windsurf, which OpenAI is acquiring for $3 billion, according to the report. In the case of OpenAI's planned conversion into a public-benefit corporation, Microsoft is reportedly asking for a larger stake in the new company that would result from that move than OpenAI is willing to give, the report said. The companies have reportedly also disagreed about whether OpenAI can partner with other cloud providers and whether Microsoft would still have access to OpenAI's technology after OpenAI says its models have achieved artificial general intelligence (AGI), per the report. It was reported in May that Microsoft and OpenAI were renegotiating their partnership deal to one in which the software giant would protect its equity stake while ensuring access to future technologies, and OpenAI gets more flexibility, with a possible initial public offering in its future. During that same month, it was reported that one of the key issues in these discussions was how much equity in a restructured OpenAI Microsoft would get in exchange for the $13 billion-plus it has invested in the startup.

ChatGPT owner OpenAI's partnership with Microsoft showing signs of...

Executives at OpenAI have discussed accusing the company's major backer, Microsoft, of anticompetitive behavior during their partnership, the Wall Street Journal reported on Monday, citing people familiar with the matter. OpenAI's effort could involve seeking a federal regulatory review of the terms of its contract with Microsoft for potential violations of antitrust law, as well as a public campaign, the report said. Such a move could unravel one of the most pivotal tech partnerships in the fast-growing field of artificial intelligence. Microsoft partnered with OpenAI in 2019, investing $1 billion to support the startup's development of AI technologies on its Azure cloud platform. The early bet gave Microsoft a front-row seat in the AI race and helped propel both companies to the forefront of the industry. Since then, however, OpenAI has been looking for ways to reduce its reliance on the tech heavyweight. The company plans to add Alphabet's Google Cloud service to meet its growing needs for computing capacity, Reuters reported earlier this month. Previous regulatory concerns have already prompted Microsoft to make concessions. Last year, it gave up its board observer seat at OpenAI to address antitrust scrutiny in the US and the UK over its influence on the startup. Spokespersons for OpenAI and Microsoft did not immediately respond to Reuters requests for comment.

Microsoft prepared to abandon high stakes talks with OpenAI, FT reports

Microsoft is prepared to abandon its high-stakes negotiations with OpenAI over the future of its alliance, the Financial Times reported on Wednesday. The tech giant has considered pausing discussions with the ChatGPT maker if the two sides remain unable to agree on critical issues such as the size of Microsoft's future stake in OpenAI, the report said, citing people familiar with the matter. The company plans to rely on its existing commercial contract to maintain access to OpenAI's technology until 2030, according to the FT report. Microsoft and OpenAI did not immediately respond to Reuters' requests for comment on the report. OpenAI executives have considered accusing Microsoft of anticompetitive behavior in their deal, the Wall Street Journal reported on Monday, adding that both the companies are discussing revising the terms of Microsoft's investment, including the future equity stake it will hold in the AI startup. "Talks are ongoing and we are optimistic we will continue to build together for years to come," the companies said in a statement in response to the WSJ report. Microsoft's multi-billion dollar investments into OpenAI has been a key factor in positioning it as a leading player in the artificial intelligence space. OpenAI requires approval from Microsoft, its major backer, to complete its transition into a public-benefit corporation, which it believes will make it easier to raise more capital.

OpenAI executives have discussed accusing Microsoft of anticompetitive behavior, WSJ reports

(Reuters) -Executives at OpenAI have discussed accusing the company's major backer, Microsoft, of anticompetitive behavior during their partnership, the Wall Street Journal reported on Monday, citing people familiar with the matter. OpenAI's effort could involve seeking a federal regulatory review of the terms of its contract with Microsoft for potential violations of antitrust law, as well as a public campaign, the report said. Such a move could unravel one of the most pivotal tech partnerships in the fast-growing field of artificial intelligence. Microsoft partnered with OpenAI in 2019, investing $1 billion to support the startup's development of AI technologies on its Azure cloud platform. The early bet gave Microsoft a front-row seat in the AI race and helped propel both companies to the forefront of the industry. Since then, however, OpenAI has been looking for ways to reduce its reliance on the tech heavyweight. The company plans to add Alphabet's Google Cloud service to meet its growing needs for computing capacity, Reuters reported earlier this month. Previous regulatory concerns have already prompted Microsoft to make concessions. Last year, it gave up its board observer seat at OpenAI to address antitrust scrutiny in the U.S. and the UK over its influence on the startup. Spokespersons for OpenAI and Microsoft did not immediately respond to Reuters requests for comment. (Reporting by Niket Nishant and Nathan Gomes in Bengaluru; Editing by Alan Barona)

OpenAI executives weigh antitrust accusation against Microsoft, WSJ reports

(Reuters) -OpenAI executives have considered accusing Microsoft, the company's major backer, of anticompetitive behavior in their partnership, the Wall Street Journal reported on Monday, citing people familiar with the matter. OpenAI's effort could involve seeking a federal regulatory review of the terms of its contract with Microsoft for potential violations of antitrust law, as well as a public campaign, the report said. Such a move could unravel one of the most pivotal tech partnerships in the fast-growing field of artificial intelligence. "Talks are ongoing and we are optimistic we will continue to build together for years to come," representatives for the two companies told the WSJ in a joint statement. 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 gives 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. Both companies did not comment on the reports from the WSJ and The Information. 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 Google Cloud service to meet its growing needs for computing capacity, Reuters reported earlier this month. (Reporting by Niket Nishant, Nathan Gomes and Gursimran Kaur in Bengaluru and Krystal Hu in New York; Editing by Alan Barona and Sherry Jacob-Phillips)

OpenAI reportedly considering accusing Microsoft of anti-competitive practices

OpenAI is reportedly considering requesting a federal investigation into the terms of its contract with Microsoft, which are suspected of violating antitrust laws. A public communication campaign could also accompany this initiative, the newspaper says. Such an escalation could weaken one of the most influential partnerships in the rapidly growing field of artificial intelligence. Since its initial $1bn investment in 2019, Microsoft has become a pillar of OpenAI's growth, hosting its models on its Azure cloud platform. But the two companies are now struggling to agree on the terms of OpenAI's transformation into a "public-benefit corporation," a statutory change that requires Microsoft's formal approval. After several months of negotiations, no agreement has been reached. According to The Information, OpenAI wants Microsoft to give up certain rights to future profits in exchange for a 33% stake in a new restructured entity. Sam Altman's group is also seeking to amend clauses that give Microsoft exclusive rights to host OpenAI's models on Azure. Microsoft, for its part, has reportedly rejected OpenAI's proposed terms and is demanding further concessions in return. "Discussions are ongoing and we remain optimistic about our desire to build together for years to come," the companies said in a joint statement sent to Reuters. This renewed tension comes as OpenAI is actively exploring ways to reduce its dependence on Microsoft. In early June, Reuters revealed that the company was planning to integrate Google's (Alphabet) cloud services to meet its growing computing power needs. As AI becomes a global strategic issue, this rift between two of the industry's leaders could reshape the industrial and regulatory landscape in the years to come.

Microsoft prepared to abandon high-stakes talks with OpenAI, FT reports

(Reuters) -Microsoft is prepared to abandon its high-stakes negotiations with OpenAI over the future of its alliance, the Financial Times reported on Wednesday. The tech giant has considered pausing discussions with the ChatGPT maker if the two sides remain unable to agree on critical issues such as the size of Microsoft's future stake in OpenAI, the report said, citing people familiar with the matter. The company plans to rely on its existing commercial contract to maintain access to OpenAI's technology until 2030, according to the FT report. Microsoft and OpenAI did not immediately respond to Reuters' requests for comment. OpenAI executives have considered accusing Microsoft of anticompetitive behavior in their deal, the Wall Street Journal reported on Monday, adding that both the companies are discussing revising the terms of Microsoft's investment, including the future equity stake it will hold in the AI startup. Microsoft's multi-billion dollar investments into OpenAI has been a key factor in positioning it as a leading player in the artificial intelligence space. OpenAI requires approval from Microsoft, its major backer, to complete its transition into a public-benefit corporation, which it believes will make it easier to raise more capital. (Reporting by Harshita Mary Varghese in Bengaluru; Editing by Maju Samuel)

Microsoft prepared to abandon high-stakes talks with OpenAI

STORY: Microsoft is prepared to abandon its high-stakes talks with OpenAI over the future of its multibillion-dollar alliance. That's according to the Financial Times on Wednesday (June 18). It said the tech giant could pause negotiations if the two sides aren't able to agree on critical issues, citing people familiar with the matter. Sticking points reportedly include the size of Microsoft's future stake in the ChatGPT maker. The report says Microsoft plans to rely on its existing contract to access OpenAI's technology until 2030. The tech giant's multibillion-dollar investments in OpenAI's technology have been key in positioning it as a leader in AI. And as its major backer, the AI start-up requires Microsoft's approval to convert to a public-benefit company. OpenAI believes that move will make it easier to raise capital. Earlier this week, the Wall Street Journal said executives at Sam Altman's firm have considered accusing Microsoft of anticompetitive behavior over their partnership. Microsoft and OpenAI did not immediately respond to Reuters' requests for comment on the latest news.

The future partnership between Microsoft and OpenAI hangs in the balance

Microsoft is reportedly ready to abandon ongoing negotiations with OpenAI regarding the future of their strategic partnership, according to the Financial Times, citing sources close to the matter. The talks, considered crucial for both companies, are stalling over the size of Microsoft's future stake in the ChatGPT creator. The US tech giant is reportedly considering suspending talks if no compromise is reached on the contentious issues, while continuing to rely on its current commercial agreement with OpenAI, which guarantees access to its technologies until 2030. This news comes as, according to the Wall Street Journal, OpenAI executives recently considered accusing Microsoft of anti-competitive practices in their partnership. Both companies are also discussing a revision of the terms of Microsoft's initial investment, including its right to a share of future profits and the evolution of its stake in the company. In a joint statement following these revelations, both companies sought to reassure the public: "Discussions are ongoing, and we remain optimistic about our ability to build together over the long term." For Microsoft, the billions invested in OpenAI have played a key role in its rise in the field of artificial intelligence, against competitors such as Alphabet and Meta. However, the current impasse highlights the growing complexity of their relationship. OpenAI, meanwhile, needs Microsoft's approval to complete its transformation into a non-profit public interest corporation, a status it believes will be more favorable for attracting new investors.