Microsoft takes 27pc stake in revamped OpenAI partnership worth US$135b
SAN FRANCISCO, Oct 29 — Microsoft and OpenAI announced Tuesday a sweeping overhaul of their landmark artificial intelligence (AI) partnership, giving both companies greater independence while maintaining their close collaboration.
Microsoft will hold approximately 27 per cent of the restructured OpenAI, an investment valued at roughly US$135 billion (RM565 billion), as the ChatGPT maker transitions to a public benefit corporation structure, according to a blog post on the OpenAI website.
OpenAI has also committed to purchasing US$250 billion in Azure cloud services from the tech giant, though Microsoft no longer holds first-refusal rights as OpenAI’s compute provider.
In the deal, Microsoft’s intellectual rights for both OpenAI’s models and products are extended through 2032.
“As we enter the next phase of this partnership, we’ve signed a new definitive agreement that builds on our foundation, strengthens our partnership, and sets the stage for long-term success for both organisations,” the companies said in a joint statement.
Regulators have signed off on the arrangement, according to the companies.
Microsoft has been a key investor in the ChatGPT-maker as OpenAI became the major player in the spending frenzy around generative AI, the technology that Silicon Valley believes will soon take over important aspects of everyday life.
But OpenAI, under the leadership of CEO Sam Altman, has increasingly looked to expand its partnerships with other companies, raising questions as to whether its deal with Microsoft was still tenable.
The partnership began in 2019 when Microsoft invested US$1 billion in what was then a small AI research organisation founded in 2015 by tech luminaries including Elon Musk.
Microsoft deepened its commitment in 2021 with additional funding, and again in January 2023 with a reported US$10 billion investment following the explosive popularity of OpenAI’s ChatGPT chatbot, which launched in November 2022.
The partnership transformed both companies.
OpenAI evolved from a research lab into one of the world’s most valuable start-ups, while Microsoft initially gained a commanding position in the AI race, integrating OpenAI’s technology — rebranded as Copilot — across its product line-up from Bing search to Office applications.
The relationship faced turbulence in November 2023 when OpenAI’s board abruptly fired Altman, only to reinstate him days later following an employee revolt and pressure from Microsoft.
The episode exposed tensions over OpenAI’s governance and direction as it balanced its non-profit origins with commercial ambitions. The new deal with Microsoft is part of OpenAI’s revamp of its company structure to prevent further instability and attract new investors.
Curing ills?
The arrangement will see OpenAI given more flexibility in its future, including the ability to develop products with third parties and serve some of its products on competing cloud platforms.
“We really think we can now take this technology — this sort of framework we built — and get the whole world to build amazing new companies and services and applications on top of it,” Altman said in a streamed chat.
The initial focus of the OpenAI non-profit that controls the public benefit corporation part of the start-up is a US$25 billion commitment to helping cure disease and maximising the benefits of generative AI while minimising its risks, according to Altman.
Microsoft, meanwhile, can independently pursue AGI development alone or with other partners.
This refers to the pursuit of artificial general intelligence, a level of AI development that matches or exceeds human capability and was a crucial aspect in the company’s previous agreements.
