Microsoft and OpenAI end their exclusive and revenue-sharing deal

Microsoft and OpenAI have officially ended their exclusive cloud computing and revenue-sharing deal, a decision that fundamentally reshapes one of the most influential partnerships in the AI industry. The original agreement, struck in 2019 and deepened in 2023, gave Microsoft exclusive rights to host OpenAI's models on Azure, along with a 75% share of OpenAI's profits until it recoups its investment. Under the new terms, Microsoft retains its $13 billion stake and gains access to OpenAI's intellectual property for its own products like Copilot, but the exclusivity is gone. OpenAI can now partner with other cloud providers, such as Oracle and Google Cloud, and will keep a larger portion of its future revenues.

This restructuring signals growing tensions and a strategic pivot for both companies. OpenAI, now valued at over $150 billion, seeks greater independence and the ability to scale its infrastructure without being locked into a single provider. Microsoft, meanwhile, is hedging its bets by developing its own AI models, including the Phi series and partnerships with other startups like Mistral. The deal also removes the profit-sharing cap, allowing Microsoft to earn a smaller percentage indefinitely rather than a larger share for a limited time. For the broader AI industry, this move could accelerate competition among cloud providers and give startups more flexibility in choosing infrastructure, potentially lowering costs and spurring innovation.