On Tuesday, Microsoft and OpenAI restructured their partnership, valuing Microsoft’s stake at $135 billion, approximately 27% of OpenAI’s new public-benefit company. This partnership aligns with OpenAI’s transition to OpenAI Group PBC under its nonprofit foundation. Microsoft is designated as OpenAI’s “frontier model partner” until 2032, consolidating CEO Sam Altman’s control over the board. While OpenAI will continue to channel around 20% of revenue to Microsoft, this is expected to cease once artificial general intelligence (AGI) is recognized. Microsoft holds exclusive IP licenses to OpenAI’s models through 2032 but not consumer hardware. API products will be exclusive to Azure, while non-API services can run on any cloud. The partnership endures amid legal scrutiny, with a class-action lawsuit alleging Microsoft exploited its Azure exclusivity to hinder competitors. Additionally, OpenAI is committed to purchasing $250 billion in Azure services, amidst rising operational costs due to ChatGPT’s soaring user base.
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