Tensions are rising between OpenAI and Microsoft as internal discussions reveal growing mistrust between the two longtime partners.
According to the Wall Street Journal, OpenAI is considering filing a complaint against Microsoft over anti-competitive behavior tied to their existing contract terms. Such a move could prompt a US antitrust investigation.
There have been signs of friction for some time. Microsoft CEO Satya Nadella has repeatedly downplayed the likelihood of achieving artificial general intelligence (AGI) and instead focused on the need for measurable returns - reportedly setting an "AGI limit" at $100 billion in profit. Given OpenAI's current cost structure, reaching that benchmark would require sustained, rapid growth.
Nadella's view that large AI models are quickly becoming interchangeable, off-the-shelf products likely hasn't won much support at OpenAI or among its investors. Microsoft also hasn't fully committed to OpenAI's ambitious data center projects.
OpenAI's restructuring stalls
The Wall Street Journal reports that OpenAI's plan to convert into a for-profit public benefit corporation has stalled - a necessary step for future investment rounds. If this restructuring isn't completed by year's end, OpenAI could lose up to $20 billion in committed funding.
Microsoft would need to sign off on the move, but is pushing for a larger stake in the new company than OpenAI is willing to give. Negotiations are currently deadlocked.
There's also friction over OpenAI’s planned $3 billion acquisition of coding startup Windsurf. Microsoft, which offers the competing GitHub Copilot, currently has broad access to OpenAI's intellectual property under their agreement. OpenAI wants to ensure this access doesn’t extend to Windsurf's technology.
At the same time, OpenAI and Microsoft are now direct competitors in several areas, including consumer chatbots and enterprise AI tools. OpenAI is looking to partner with multiple cloud providers to reduce its reliance on Microsoft's infrastructure.
Microsoft, meanwhile, wants contractual guarantees that it will retain access to OpenAI’s technology even if OpenAI reaches artificial general intelligence - a milestone OpenAI sees as a potential turning point that could end the partnership.
Despite these conflicts, both companies issued a joint statement to the WSJ describing their partnership as long-term and productive, highlighting their track record of building advanced AI tools together. Talks are ongoing, and both sides say they remain optimistic about future collaboration.
OpenAI pushes for new terms on exclusivity and profits
The Information reports that OpenAI is demanding significant financial and contractual concessions from Microsoft. The company wants to end Microsoft's exclusive right to distribute OpenAI models through its own cloud infrastructure, signaling to investors its intention to make models available through other providers such as Google or Amazon.
Profit-sharing is also a sticking point. OpenAI wants to sharply reduce the share Microsoft receives from future revenue. Based on internal projections, Microsoft could receive more than $35 billion by 2030 if the current arrangement holds, assuming $174 billion in revenue.
OpenAI is reportedly proposing that Microsoft take a roughly 33 percent stake in the new PBC structure in exchange for waiving future profit claims.
Reuters recently reported that OpenAI has started using Google Cloud's computing resources. The unexpected partnership with a direct competitor is meant to meet surging demand for training and running large AI models while reducing dependence on Microsoft. The agreement, signed in May, supplements OpenAI's existing infrastructure, which includes its own Stargate data center project. Alongside Microsoft and Google, OpenAI is also working with Oracle.
