(Bloomberg) \u2014 Microsoft Corp. and OpenAI have agreed to drop the software giant\u2019s exclusive right to sell the startup\u2019s AI models, opening the door for the ChatGPT maker to pursue deals with cloud-computing rivals like Amazon.com Inc.<\/p>\n
In exchange for ending that exclusivity \u2014 which helped boost Microsoft\u2019s cloud sales in the early years of the AI boom \u2014 the world\u2019s largest software maker will no longer pay a revenue share on OpenAI products it resells on its cloud. The two companies announced the revised deal in a joint statement on Monday.<\/p>\n
The new pact is meant to simplify a complicated relationship that has been foundational to OpenAI\u2019s rise and the broader artificial intelligence boom. OpenAI has since pursued deals with multiple cloud providers, including Amazon, to meet its growing computing needs to build and serve AI software to a wider audience.<\/p>\n
\u201cThe greater predictability in the amended agreement strengthens our joint ability to build and operate AI platforms at scale while providing both companies the flexibility to pursue new opportunities,\u201d OpenAI and Microsoft said in their statement. \u00a0<\/p>\n
Monday\u2019s agreement clears the way to OpenAI\u2019s models appearing on Amazon Web Services and other cloud-computing providers.\u00a0<\/p>\n
As part of an investment announced earlier this year, the Amazon unit said it was jointly developing products with OpenAI that would be hosted on AWS. Microsoft weighed legal action, on the view that the effort would almost certainly breach its exclusive rights to OpenAI\u2019s intellectual property, the Financial Times reported last month.<\/p>\n
Microsoft remains OpenAI\u2019s \u201cprimary cloud provider,\u201d and new products from the startup will be made available first on Azure, Microsoft\u2019s cloud unit.\u00a0<\/p>\n
Revenue share paid by OpenAI on sales of its products that it makes itself will be capped, the companies said. But until they reach that cap \u2014 which wasn\u2019t disclosed \u2014 the revised deal brings more certainty that OpenAI will continue to send those checks.\u00a0<\/p>\n
Microsoft will receive a revenue share from OpenAI through 2030, regardless of progress the startup makes toward its goal of building artificial general intelligence \u2014 a system capable of matching human capability across tasks. Under the prior agreement, revenue share payments were due to stop should OpenAI reach that milestone.\u00a0<\/p>\n
As part of OpenAI\u2019s restructuring last year as a for-profit business, Microsoft received a 27% ownership stake in the AI startup. The software giant was a key holdout in OpenAI\u2019s corporate overhaul as the two negotiated the complex terms of their partnership.<\/p>\n
Microsoft\u2019s relationship with OpenAI is set to be in the spotlight this week as the companies square off against Elon Musk in court. The billionaire has accused OpenAI of abandoning its founding principles by converting to a for-profit company with billions of dollars in support from Microsoft. He\u2019s seeking as much as $134 billion in damages from OpenAI and Microsoft.<\/p>\n
Microsoft shares were down about 1% as the markets opened in New York on Monday. Amazon fell less than 1%.<\/p>\n
\u201cWe do not believe this revised agreement should come as a major surprise to investors at this point,\u201d analysts with Evercore ISI wrote in a note to clients on Monday. \u201cMicrosoft has increasingly signaled interest in a broader multi-model strategy, while OpenAI has clear incentives to expand distribution more broadly across the market.\u201d<\/p>\n
\u2013With assistance from Brody Ford.<\/p>\n
(Updates with detail on artificial general intelligence provision, Musk trial, analyst comment, beginning in the eighth paragraph.)<\/p>\n
More stories like this are available on bloomberg.com<\/a><\/p>\n \u00a92026 Bloomberg L.P.<\/p>\n