OpenAI, Microsoft Make Major Changes to Partnership, Remove the AGI Clause

OpenAI and Microsoft's exclusive partnership is now officially over. On Monday, both companies announced several changes to their existing deal, including the removal of key exclusivity clauses. Additionally, the amended partnership has also ended the vaguely worded artificial general intelligence (AGI) clause, which dictated several “if-this-then-that” scenarios. The new agreement is now clearer and lets both companies better safeguard their interests. Interestingly, the second stage of contract negotiations between Microsoft and OpenAI has occurred just six months after the two entities agreed to let the ChatGPT maker create a for-profit entity.

OpenAI, Microsoft Announce Restructured Deal

In separate announcement posts, OpenAI and Microsoft revealed the key changes made to their existing deal. The companies cited “rapid pace of innovation” and the evolving landscape as the reason behind updating the terms of the partnership.

“Today, we are announcing an amended agreement to simplify our partnership and the way we work together, grounded in flexibility, certainty, and a focus on delivering the benefits of AI broadly. The 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,” OpenAI and Microsoft said, announcing the key changes.

Perhaps the most important part of the newly structured deal is the removal of the AGI clause. Previously, the partnership had several scenarios listed in case OpenAI or Microsoft reached AGI first, and that determined the future of the partnership. The language was dense, and it tried to navigate through multiple hypothetical scenarios, making the partnership appear uncertain in the long-term. Now, that is gone.

Now, while Microsoft remains OpenAI's primary cloud partner and its products will first ship on Azure, the Copilot maker now reserves the right not to support a specific capability. On the other hand, OpenAI can now serve all its products to any other cloud provider. This lets Microsoft pick and choose the products it wants to host, saving its resources. OpenAI can rack up its revenue by forging similar non-exclusive deals with other cloud providers.

Just like before, Microsoft will continue to have a license to OpenAI's AI models and products till 2032, but this license is now non-exclusive. This means OpenAI can offer its models and tools to companies such as Amazon and Google. In return, Microsoft will not have to pay a revenue share to the ChatGPT maker.

OpenAI, on the other hand, will continue to pay Microsoft shares from its revenue until the end of 2030. However, instead of paying in perpetuity, there will be a total cap on the amount the Windows maker receives. The revenue share is also determined independently of the AI giant's technology progress. Finally, Microsoft will continue as a major shareholder of the San Francisco-based AI firm.