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On Monday, Microsoft and OpenAI announced they have renegotiated the agreement binding the two companies. While some commentary on social media framed the update as a win for OpenAI, both sides said the revised terms address key concerns and create clearer commercial boundaries.
The most significant update resolves an issue that had been hanging over OpenAI since it signed its up-to-$50 billion deal with Amazon. Under the new arrangement, Microsoft no longer has exclusive access to OpenAI’s products and intellectual property until OpenAI achieves AGI. Instead, Microsoft receives a non-exclusive license to OpenAI IP for models and products through 2032.
The companies continue to describe Microsoft as OpenAI’s primary cloud partner. For the six years covered by the agreement, this suggests most of OpenAI’s cloud demand will likely be served by Azure, even as OpenAI works to build its own data centers with other partners.
In October, OpenAI agreed to buy an additional $250 billion worth of Microsoft’s cloud. The companies’ messaging also signals to Microsoft shareholders that OpenAI will remain a large Azure customer.
OpenAI products will ship first on Azure unless Microsoft cannot—or chooses not to—support the required capabilities. Importantly, the new terms allow OpenAI to serve all its products to customers across any cloud provider.
The announcement does not define what “first” means in operational terms, including whether it implies exclusivity on Azure for a limited period or simply that Microsoft will be among the initial vendors carrying OpenAI’s latest products.
A central element of the revised deal is that it removes the possibility that Microsoft could sue OpenAI over OpenAI’s agreement with Amazon.
While OpenAI benefits from the flexibility to work with other clouds, Microsoft also secured changes to payments. The new deal allows Microsoft to stop paying a revenue share to OpenAI. OpenAI will continue to pay a revenue share to Microsoft through 2030, though it is now subject to a cap.
Exact cash flows to Microsoft were not specified, but the article notes they are likely to be in the billions. Last quarter, Microsoft reported it earned $7.5 billion in a single quarter from its investment in OpenAI.
Microsoft also remains a major shareholder in OpenAI, owning about 27% of the for-profit entity, according to the company’s disclosure in October. The arrangement continues to financially benefit Microsoft from OpenAI’s growth, including sales made on AWS.
The trade-off is that Microsoft gives up potential additional cloud revenue it might have gained under a more exclusive arrangement with OpenAI.
The article notes that Microsoft has also strengthened its relationship with OpenAI rival Anthropic, with Anthropic’s Claude AI intended to power agentic products on Microsoft’s cloud infrastructure.
Enterprises are positioned as the biggest beneficiaries, with the ability to choose both their models and their cloud providers as the major AI and cloud providers compete to serve them.
In October, Microsoft and OpenAI announced a new agreement to help OpenAI fend off a lawsuit from Elon Musk related to its corporate structure and the ability to run non-API-accessed products on other clouds.
In November, OpenAI and Amazon signed their first multi-year agreement, with OpenAI contracting for $38 billion worth of AWS cloud.
In February, Amazon announced an up to $50 billion investment in OpenAI, pending conditions that included exclusive tech development and hosting for Frontier and stateful tech; on the same day, Microsoft refuted that AWS would have that tech exclusively.
In March, the Financial Times reported that Microsoft was considering legal action.
In April, OpenAI and Microsoft announced a new deal that included a calendar end date for their exclusive partnership and allowed OpenAI to run all of its products on other clouds; Microsoft no longer has to pay OpenAI revenue share, and Microsoft remains a major shareholder in OpenAI.
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