Microsoft and OpenAI redefine their AI partnership

Microsoft and OpenAI have signed a new agreement that changes how their partnership will work in its next phase. The deal keeps Microsoft as the main infrastructure and model partner, but gives both companies more room to develop products and pursue artificial general intelligence, or AGI.

The restructuring turns OpenAI’s for-profit division into a public benefit corporation, a structure designed to combine commercial goals with a broader public interest purpose. After the recapitalization, Microsoft will hold a stake valued at approximately $135 billion, equivalent to about 27% of OpenAI Group PBC when employees, investors, and the OpenAI Foundation are included.

The figure cannot be directly compared with Microsoft’s previous stake. Excluding OpenAI’s most recent funding rounds, Microsoft held the equivalent of 32.5% of the for-profit company.

What Microsoft keeps

The agreement preserves two central parts of the relationship:

• OpenAI will remain Microsoft’s partner for its most advanced models.
• Microsoft will retain exclusive rights to the intellectual property and Azure API access until AGI is declared.

The intellectual property includes the knowledge, models, and products developed by OpenAI. However, the deal extends those rights through 2032 and also covers models created after AGI, with specific safeguards.

The declaration of AGI will no longer depend solely on OpenAI. From now on, an independent panel of experts must verify it. This matters because the arrival of AGI triggers several terms in the agreement, including the end of certain rights and of revenue sharing between the two companies.

More freedom for both companies

OpenAI will be able to develop some products alongside other companies. If those products offer API access, they will be exclusive to Azure. Products that do not depend on an API can run on any cloud provider.

Microsoft will also be able to try to develop AGI on its own or with third parties. If it uses OpenAI technology to do so before a panel confirms AGI, the models will have to exceed very high computing-capacity thresholds, described in the agreement as significantly greater than the systems used to train leading models today.

Microsoft’s rights to OpenAI’s research will have a different limit: they will remain in effect until the panel verifies AGI or until 2030, whichever comes first. This category covers confidential methods and models intended for research or internal use, but does not include elements such as the model architecture, its weights, inference code, fine-tuning code, or data center hardware and software technology. Those non-research rights will remain in place.

The agreement also excludes OpenAI’s consumer hardware from Microsoft’s rights. That leaves a path for OpenAI to develop its own devices without automatically placing them within the current technology partnership.

A $250 billion commitment to Azure

OpenAI has committed to purchasing an additional $250 billion in Azure services. In return, Microsoft will give up its right of first refusal, which allowed it to be OpenAI’s first-choice provider of computing capacity.

In practice, OpenAI will be able to buy capacity from other providers, although it will still have a massive commitment to Azure. It will also be able to provide API access to US government customers involved in national security, regardless of which cloud provider they use.

OpenAI will also be able to release models with open weights, meaning models whose main components can be downloaded and run outside OpenAI’s infrastructure, as long as they meet the specified capability and safety criteria.

For you, the most important change is that the relationship no longer operates as such a closed dependency. Microsoft retains a privileged position, but OpenAI gains more freedom to work with other partners, clouds, and products. The next point to watch is how AGI is defined and verified, because that decision will determine how long Microsoft’s rights, payments, and several of its exclusive advantages last.