① Microsoft and OpenAI announced a revised cooperation agreement: the intellectual property license for models will shift from exclusive to non-exclusive, allowing OpenAI to offer its products through any cloud service provider; ② Microsoft will no longer pay revenue sharing to OpenAI; ③ As OpenAI partners with AWS and Microsoft accelerates the development of its proprietary large models, the relationship between the two parties shifts from “deep integration” to “coexistence of competition and cooperation.”
Cailian Press, April 27 (Editor Shi Zhengzhi) Once regarded as a quintessential example of an 'intimate partnership' in the AI era, $Microsoft (MSFT.US)$ and OpenAI have finally reached a moment of mutual parting, granting each other freedom.
On Monday evening Beijing time, Microsoft and OpenAI simultaneously issued statements announcing that their “cooperation has entered a new phase.”
(Source: Company's official website)
The statement indicated that Microsoft’s intellectual property licensing for OpenAI's models and products will become non-exclusive, while the validity period remains unchanged until 2032.
Microsoft will no longer pay revenue sharing to OpenAI. OpenAI will continue to pay revenue sharing to Microsoft until 2030, with the same sharing ratio but subject to an undisclosed total cap, and this arrangement will not be affected by technological advancements.
Meanwhile, Microsoft remains OpenAI’s primary cloud partner. New products from OpenAI will be prioritized for release on Microsoft Azure Cloud unless Microsoft is unable or chooses not to support essential functionalities. OpenAI can now provide all its products to customers through any cloud service provider.
Both parties stated in the announcement that the revision of the agreement “aims to simplify the cooperative relationship and collaboration methods.” The revised agreement enhances the predictability of the partnership, thereby strengthening both parties’ ability to build and operate AI platforms at scale, while also preserving necessary flexibility for exploring new development opportunities.
Following this news, Microsoft fell nearly 1% at the opening on Monday after dropping nearly 4% during pre-market trading. Amazon also declined nearly 1% after the market opened on Monday. Both Microsoft and Amazon are scheduled to release their earnings reports after the market closes on Wednesday local time.
The relationship between the two parties had already been strained.
As background, Microsoft’s investment in OpenAI began as early as 2019, and in January 2023, it invested $10 billion to acquire nearly one-third of the equity in ChatGPT’s developer (valued at approximately $29 billion at the time of the transaction).
When OpenAI underwent restructuring in October last year, it was confirmed that Microsoft held 'approximately 27%' of the equity in OpenAI's for-profit entity. Based on OpenAI's recent valuation of $850 billion during its latest round of financing, Microsoft's $13 billion investment has doubled to nearly $228.3 billion.
The seeds of discord between the two parties were sown in this agreement. Microsoft disclosed at the time that OpenAI could now co-develop certain products with third parties, but API products co-developed with third parties would be limited to Azure. Non-API products could be offered on any cloud service provider.
The issue lies in the fact that OpenAI's 'third-party partner' is Amazon Web Services (AWS), the global leader in cloud computing. At the end of February this year, Amazon announced a $50 billion investment in OpenAI, with an initial tranche of $15 billion and subsequent amounts to be unlocked upon reaching specific conditions.
OpenAI also announced that AWS would become the exclusive third-party cloud distributor for OpenAI’s enterprise-grade intelligent agent management platform Frontier. Meanwhile, OpenAI will use Amazon’s Trainium self-developed chips and collaborate with the latter to develop customized models (thereby circumventing Microsoft's API exclusivity).
Subsequent rumors suggested that Microsoft's management was concerned that OpenAI's collaboration with AWS violated the agreement for OpenAI to exclusively run its models on Microsoft Azure Cloud, and had considered legal action. At the time, a Microsoft spokesperson told the media meaningfully: 'We are confident that OpenAI understands and respects the importance of fulfilling its legal obligations.'
Meanwhile, in an internal memo exposed in mid-April, OpenAI's Chief Revenue Officer Denise Dresser complained that Microsoft was holding back its development. Dresser wrote that the company's newly established cloud partnership with AWS had generated 'astonishing' demand, but its collaboration with Microsoft 'limited our ability to provide services where customers are located.'
After revising the agreement at the end of last year, Microsoft also accelerated its efforts to develop its own large-scale models. While the previous agreement allowed Microsoft to use OpenAI's intellectual property, it also prohibited the development of competitive artificial intelligence systems.
Mustafa Suleyman, CEO of Microsoft AI, stated at the beginning of April that the team's goal by 2027 is to 'truly reach the cutting-edge level,' covering models capable of responding or generating text, images, and audio.
Editor/Jayden