OpenAI and Microsoft’s often-renegotiated deal has become less exclusive. A clause about artificial general intelligence, which has long dictated the future of their partnership, has been removed.
On Monday, Microsoft announced several changes to its OpenAI agreement. Microsoft will remain OpenAI’s primary cloud partner, and OpenAI products will initially ship on Azure unless Microsoft is unable and opts not to support them. However, OpenAI is now allowed to offer its products through any cloud provider, enabling it to attract enterprise clients as it reportedly considers going public. This change allows OpenAI to potentially work with companies like Amazon or Google and address computing constraints previously causing friction with Microsoft. Nevertheless, Microsoft reportedly still receives a share of revenue from these external agreements.
Of note, the two companies have eliminated the deal’s “AGI clause,” which stipulated various conditions if one achieved artificial general intelligence — a term used to describe AI systems that match or surpass human intelligence in diverse tasks. This change affects a revenue-sharing arrangement, previously meant to persist until AGI’s declaration. Now, payments from OpenAI to Microsoft will continue through 2030, maintaining the same percentage but capped rather than perpetual. Payments will end regardless of OpenAI’s tech advancements, including AGI, effectively terminating that agreement.
This marks the second renegotiation of the clause. After OpenAI’s controversial for-profit restructuring in October, which needed Microsoft’s approval, the companies formed a new agreement. Prior to this, Microsoft would lose rights to OpenAI’s technology upon reaching AGI. However, the October changes extended Microsoft’s IP rights for OpenAI’s models through 2032, even if an independent panel declared AGI was achieved.
Currently, there is no provision for panels to assess AGI, nor specific steps for when it might occur, meaning OpenAI may never have to announce reaching AGI. Microsoft’s license to OpenAI’s models, valid until 2032, is now non-exclusive, allowing competitors to engage.
Previously, Microsoft owned approximately 27 percent in the public benefit corporation. The new terms highlight Microsoft’s continued role as a major shareholder in OpenAI, without specifying its stake or indicating any changes.
OpenAI faces pressure to approach profitability, having spent substantial funds to acquire more computing power and pursue AGI. It plans to focus on enterprise and coding for larger revenue opportunities, cutting projects like Sora and features like ChatGPT’s intended erotica component, while restructuring its science department. The new Microsoft deal represents another step in this direction.