The companies that sparked the artificial intelligence revolution are in talks to reshape their partnership, as Microsoft seeks to guarantee continued access to OpenAI’s technology even after the startup reaches “artificial general intelligence.”
Article contents:
- Introduction: redefining a world-changing relationship
- The artificial general intelligence (AGI) question
- A fraying partnership
- What is at stake for each party?
- Thorny negotiations
- Conclusion: shared future or separate paths?
Introduction: redefining a world-changing relationship
Microsoft is in advanced talks to strike a deal that could grant it ongoing access to vital OpenAI technology, an agreement that would remove a major hurdle to the startup’s efforts to become a for-profit entity. These negotiations come at a crucial time as the relationship between the two companies, which helped launch the AI era, has grown increasingly strained.
The artificial general intelligence (AGI) question
The two companies have discussed new terms that would allow Microsoft to use OpenAI’s latest models and other technology even if the startup decides it has reached its goal of building a more powerful form of AI known as artificial general intelligence (AGI). Under the current contract, OpenAI achieving AGI is viewed as a major milestone where Microsoft loses certain rights to OpenAI’s technology.
Artificial general intelligence, defined as “highly autonomous systems that outperform humans at most economically valuable work,” is OpenAI’s ultimate goal. Renegotiating what happens past that point is critical for Microsoft’s long-term future.
A fraying partnership
The relationship began to strain when OpenAI’s board fired (and then rehired) Sam Altman in November 2023, an episode that shook Microsoft’s confidence in its partner. The rift widened as both companies began competing for the same customers. Even as executives publicly praised their close ties, OpenAI sought to lessen its reliance on Microsoft, securing permission to build data centers with rival companies.
What is at stake for each party?
For OpenAI, it is eager to change its complex non-profit structure, in part to secure additional funding to continue building data centers. The company also wants a larger share of the revenue currently split with Microsoft and adjustments to Microsoft’s access to its intellectual property. It also seeks to ensure Microsoft commits to strict safety standards when deploying its technology.
For Microsoft, it is looking for continued access to OpenAI’s technology after the current contract ends in 2030. Losing sudden access to models that have become integral to its products such as Azure and Copilot would be disastrous.
Thorny negotiations
Negotiations have been thorny. One of the main sticking points is the size of Microsoft’s stake in the restructured company, with the two sides discussing a stake in the 30-35% range. There is also a clause in the current contract preventing Microsoft from pursuing artificial general intelligence technology on its own, which Microsoft may want to change.
Although the tone of the talks has been positive, the deal is not final and could face new hurdles. If Microsoft deems the stake and other changes insufficient, it is prepared to abandon talks and stick to the current contract terms.
Conclusion: shared future or separate paths?
These negotiations represent a pivotal moment for both Microsoft and OpenAI. Reaching an agreement could strengthen their partnership for years to come, providing the stability both need. But failing to reach a deal could lead to further friction and competition, and potentially a permanent split in the future. The outcome of these talks will shape not only the future of both companies, but also the competitive landscape of the entire AI industry.
Frequently asked questions
What is artificial general intelligence (AGI)?
It is a hypothetical form of AI that can understand or learn any intellectual task that a human can do. It is considered the ultimate goal of AI research.
How much has Microsoft invested in OpenAI?
Microsoft has invested approximately $13.75 billion in OpenAI across multiple rounds, making it by far the startup’s largest investor.
Why is OpenAI’s access to AGI a problem for Microsoft?
Under the current contract, when OpenAI’s board decides it has achieved AGI, its commercial obligations to Microsoft change significantly, and Microsoft may lose its exclusive rights to future technology. Microsoft is seeking to remove this potential “kill switch.”
