Microsoft and OpenAI have signed an agreement that restructures their partnership, which began in 2019.
The deal supports OpenAI’s transition to a public benefit corporation and establishes terms for the companies to operate with autonomy whilst maintaining elements of their collaboration.
Following recapitalisation, Microsoft holds an investment in OpenAI Group PBC valued at $135 billion, representing 27 per cent on an as-converted diluted basis, inclusive of employees, investors, and the OpenAI Foundation. Before OpenAI’s funding rounds, Microsoft held a 32.5 per cent stake on an as-converted basis in the for-profit entity.
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“As we enter the next phase of this partnership, we’ve signed a new definitive agreement that builds on our foundation, strengthens our partnership, and sets the stage for long-term success for both organisations.,” Microsoft said in a statement.
The agreement extends Microsoft’s IP rights for models and products through 2032, now including models developed after AGI is achieved, with safety guardrails. OpenAI remains Microsoft’s frontier model partner, and Microsoft retains Azure API exclusivity until AGI.
When OpenAI declares AGI, an independent expert panel will verify the declaration. Microsoft’s IP rights to research—the methods used in developing models and systems—will remain until the expert panel verifies AGI or through 2030, whichever occurs first.
Research IP includes models intended for internal deployment or research. Model architecture, model weights, inference code, finetuning code, and IP related to data centre hardware and software are excluded from research IP, and Microsoft retains these rights.
ChatGPT maker OpenAI can now build products with anyone as Microsoft exclusivity deal ends
OpenAI can now develop products with third parties. API products developed with third parties will remain exclusive to Azure, whilst non-API products may be served on any cloud provider.
Microsoft can pursue AGI development alone or with third parties. If Microsoft uses OpenAI’s IP to develop AGI before AGI is declared, the models will be subject to compute thresholds that are larger than the size of systems used to train models currently.
OpenAI has contracted to purchase $250 billion of Azure services. Microsoft no longer has a right of first refusal to be OpenAI’s compute provider.
OpenAI can now provide API access to US government national security customers, regardless of the cloud provider. The company can also release open weight models that meet capability criteria.
Microsoft keeps OpenAI technology rights until 2032 but both companies can now compete for AGI
Microsoft’s IP rights now exclude OpenAI’s consumer hardware. The revenue share agreement remains until the expert panel verifies AGI, though payments will be made over a period.
“Both companies are better positioned than ever to continue building great products that meet real-world needs, and create new opportunity for everyone and every business,” Microsoft said.
