OpenAI wants to shake loose from the Volish grip on its tech and compute resources, and needs Redmond's blessing to morph into a profit-making public-benefit corporation. Without that, OpenAI's planned transformation and its hopes of raking in another $20 billion go up in smoke.
The standoff has become so ugly that OpenAI execs have reportedly toyed with what insiders call the "nuclear option": accusing the software king of the world of anticompetitive behaviour. That would mean dragging regulators into the mess, possibly asking the feds to dig through the contract looking for violations of antitrust law, and making a public stink.
The pair issued a joint statement insisting everything was fine, there was nothing to see here, move on please.
"We have a long-term, productive partnership that has delivered amazing AI tools for everyone," the statement claimed. Talks are apparently ongoing, and both sides still pretend to be optimistic.
At the core of the spat is OpenAI's $3 billion buyout of a coding startup called Windsurf. Microsoft wants access to Windsurf’s intellectual property. OpenAI, understandably, doesn’t want that, especially since Microsoft already has a competing GitHub Copilot AI tool.
There’s disagreement over how big a slice of the pie Microsoft should get once OpenAI converts. Redmond wants a chunk bigger than OpenAI is willing to offer. If they can’t settle this by the end of the year, OpenAI’s conversion gets derailed and the $20 billion it's chasing vanishes.
The Biden administration’s FTC already had Vole under the antitrust microscope, including past investments in OpenAI. Microsoft’s exclusive right to sell OpenAI tools through Azure and its early access to the company’s tech are under review.
Originally, Vole dumped $1 billion into OpenAI in 2019, later expanding the relationship to get first dibs on tech and lock OpenAI into Azure. That arrangement was supposed to make Microsoft the sole compute provider, but OpenAI set up its own data centre project, Stargate, on the side.
Now, the two are butting heads directly on product lines from chatbots to enterprise tools. Nadella even hired a rival of Sam Altman’s to run a secret model-building team inside Microsoft.
OpenAI wants out of the monogamous arrangement and is lobbying for access to other cloud providers. Meanwhile, Microsoft is playing hardball and demanding access to OpenAI’s tech even if it hits so-called artificial general intelligence, the theoretical point where machines become as smart as humans.
That scenario is far from settled. Some believe it's close, others think it's a fantasy. But if OpenAI ever claims it’s reached that milestone, the current deal says the partnership ends and Microsoft doesn’t like the sound of that.
