Microsoft and OpenAI are in the final stages of renegotiating a partnership that has defined much of the current AI boom. The two companies are exploring a new agreement that would allow Microsoft to maintain access to OpenAI’s most advanced technologies, regardless of whether OpenAI achieves artificial general intelligence (AGI), a major inflection point that, under the current contract, could significantly curtail Microsoft’s rights.

The deal, if finalized, would resolve one of the key sticking points in OpenAI’s planned restructuring into a more conventional profit-oriented enterprise.

The talks have been ongoing for several months and are reportedly progressing.

Microsoft, having invested over $13.75 billion into OpenAI, is seeking assurances that it won’t lose technological access or return on investment should OpenAI’s structure or mission change. Meanwhile, OpenAI is pushing for greater autonomy in licensing and revenue distribution as it seeks new capital and broader strategic freedom.

Why It Matters: The Microsoft-OpenAI agreement is an indicator of how powerful AI platforms are governed and monetized in an industry increasingly defined by blurred lines between cooperation and competition. The outcome could influence how other tech giants and startups navigate long-term partnerships around AI capabilities.

• The AGI Clause Is the Crux of the Conflict: Under the current terms, OpenAI can terminate or restrict Microsoft’s access to its technology once it determines it has achieved AGI. This clause has caused significant concern at Microsoft, which has embedded OpenAI’s models deeply into products like Copilot and Azure. Both sides are now negotiating revisions to ensure Microsoft retains access beyond the AGI threshold.

• Ongoing Structural Overhaul at OpenAI: OpenAI, currently governed by a nonprofit board overseeing a capped-profit subsidiary, wants to transition into a public-benefit corporation. That move requires Microsoft’s approval and would allow OpenAI to raise larger funding rounds and unlock higher investor returns. Microsoft, in turn, is negotiating for a larger equity stake, reportedly in the low to mid-30% range, in a restructured OpenAI.

• Elon Musk’s Lawsuit and Regulatory Scrutiny Complicate Talks: Musk, a co-founder of OpenAI, has sued the company, alleging it abandoned its original nonprofit mission. Regulators are also examining whether OpenAI’s current structure complies with transparency and governance norms. These factors add legal and reputational pressure to the negotiations, potentially influencing their timing and terms.

• Diverging Commercial Interests Add Strain: The partnership has shown signs of strain as OpenAI has pursued deals with competitors like Google, Oracle, and CoreWeave to diversify its cloud infrastructure. Microsoft’s insistence on maintaining access and influence over OpenAI’s tools clashes with the startup’s desire to operate more independently in enterprise and government markets.

• Shared Goals, But Fractured Trust: While both companies stand to benefit from continued collaboration, trust has frayed, particularly after the temporary ouster of OpenAI CEO Sam Altman in 2023. Microsoft was caught off guard and has since sought tighter contractual controls. OpenAI, meanwhile, is seeking to redefine how its intellectual property is shared and wants assurances that Microsoft will use its technology in line with strict safety and ethical standards.

Go Deeper -> Microsoft Nears OpenAI Agreement for Ongoing Tech Access – Bloomberg

Microsoft in talks to maintain access to OpenAI’s tech beyond AGI milestone – TechCrunch