OpenAI breaks free of Microsoft's cloud
· Axios
OpenAI's revised Microsoft pact lets it sell AI models across multiple clouds, enabling a likely expansion with Amazon and broader enterprise distribution.
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Why it matters: The shift ends OpenAI's effective cloud exclusivity, widening its reach to customers using AWS, Google Cloud or others — and intensifying AI platform competition.
Driving the news: A rewritten deal frees OpenAI to sell through any cloud, caps Microsoft's cut of OpenAI revenue and scraps a controversial provision that would have changed the companies' business relationship once artificial general intelligence (AGI) was achieved.
Zoom in: Amazon and OpenAI are poised to quickly capitalize on the change.
- "We're excited to make OpenAI's models available directly to customers on Bedrock in the coming weeks," Amazon CEO Andy Jassy said on X on Monday, promising more details at a San Francisco event AWS is hosting on Tuesday.
- The companies had previously discussed working together, but earlier plans focused on building a new AI system outside OpenAI's then-exclusive Microsoft deal.
Zoom out: The revised pact comes amid a fast-moving AI landscape that already looks significantly different than it did in October, when the prior round of changes to the Microsoft-Open AI relationship was announced.
- OpenAI is increasingly focused on securing business revenue, a task that can be made significantly easier if it can offer its services via whichever cloud its potential customers are already using.
Between the lines: Each company gets some things it wants out of the revamped pact.
- The revised deal kills the AGI trigger — a clause that hinged Microsoft's IP rights on OpenAI declaring it had achieved AGI, which both companies found too vague.
- Microsoft now holds non-exclusive rights to OpenAI's IP (excluding research) through 2032, leaving OpenAI free to license to others.
What Microsoft gets
- Microsoft no longer has to share revenue with OpenAI that it gets from serving its models via Azure.
- It continues to get 20% of OpenAI revenue until 2030, though that is now subject to a cap that the companies did not publicly disclose.
- And OpenAI still has to ship its models first for Azure, per the revised terms.
- Microsoft also gets intellectual property rights to OpenAI's products (but not its research) through 2032.
What OpenAI gets
- The ability to offer its models via any cloud is the big thing, opening up the possibility of a deal with Google Cloud, in addition to the expanded tie-up with AWS.
- Google is taking a close look at the revised deal terms to see what might be possible, according to a source familiar with the situation.
- In addition to the revenue opportunity that those clouds open up, the change could ease investor concerns ahead of the company's expected IPO later this year.
- Microsoft's IP rights are no longer exclusive, so OpenAI could also make pacts with others.