OpenAI And Microsoft Renegotiate Multi-Billion Dollar Partnership

The tech companies OpenAI and Microsoft are allegedly going through a difficult negotiation process to readjust their multi-billion-dollar partnership, after the AI startup announced its final company structure.

According to The Financial Times (FT), sources familiar with the matter have revealed that the tech giants are rewriting the terms of their partnership before launching ChatGPT’s Initial Public Offering (IPO).

One of the main topics currently under the “tough negotiation” is Microsoft’s equity in the new structure, after the company has invested over $13 billion in OpenAI—currently valued at $260 billion. Other terms, such as access to the cutting-edge technology and new business decisions, are also at stake.

“The friction comes partly due to style. OpenAI says to Microsoft ‘gives us money and compute and stay out of the way: be happy to be on the ride with us.’ So naturally this leads to tensions,” said one senior employee at Microsoft to FT. “To be honest, that is a bad partner attitude, it shows arrogance.”

Both companies are considering different alternatives that will allow them to maximize their benefits.

“Microsoft still wants [this conversion] to succeed. It’s not like it’s all gone to hell and it’s open warfare. There’s a tough negotiation, but we’re confident we’ll get it done,” said a person close to OpenAI to FT.

The tech giants are also considering an expansion of the contract. The current agreement, which covers Microsoft’s access to OpenAI’s products and models and revenue shares, runs until 2030, and could be extended if they reach new terms, such as Microsoft giving away part of its equity.

The interconnectedness between the two companies has been raising concerns for years, as both develop similar technologies and have simultaneously supported each other to boost their success. Last year, in April, Microsoft added OpenAI as a competitor in its annual SEC report for the first time, and a few months ago, Microsoft also integrated more AI models into its platforms to reduce its dependence on OpenAI.