Microsoft and OpenAI have signed an agreement to revise the duo’s long-running partnership. The move marks the latest development in a changing relationship dynamic for the two firms, with both forging ties with other industry stakeholders.
“Microsoft and OpenAI have signed a nonbinding memorandum of understanding (MOU) for the next phase of our partnership,” a joint statement reads. “We are actively working to finalize contractual terms in a definitive agreement.”
The shake-up comes amid a push at OpenAI to shift from a nonprofit entity to a for-profit organization. This requires approval from Microsoft, however, and the proposed agreement comes with a notable caveat.
OpenAI revealed the nonprofit parent will still retain oversight of the company, taking an equity stake of around $100 billion.
In a follow-up statement, chairman Bret Taylor noted this makes it “one of the most well-resourced philanthropic organizations in the world”.
Microsoft and OpenAI were destined to clash
The proposed changes come as Microsoft and OpenAI continue to drift apart in key areas. It’s a talking point that’s become a recurring theme over the last year, with both companies now essentially competing for customers.
In January, Microsoft told ITPro OpenAI “continues to be our partner on frontier models” following reports it was exploring the prospect of integrating third-party alternatives to power its Microsoft 365 Copilot service.
On 9 September, reports from The Information revealed Microsoft will now pay Anthropic to use its AI in Office 365 applications alongside OpenAI options. This will see Anthropic AI models used to power a host of key applications, including Word, Excel, Outlook, and PowerPoint.
OpenAI has also made moves to distance itself from Microsoft, largely on the issue of compute power. The company is a key figure in the $500 billion Stargate Project alongside Oracle and SoftBank, for example, which aims to build out AI infrastructure across the United States.
In January, OpenAI also moved away from using Microsoft Azure as its sole cloud provider, and has been forging closer ties with Oracle. A June 2024 agreement saw Oracle, Microsoft, and OpenAI partner to "provide additional capacity” for the latter.
This included using the Azure AI platform on Oracle Cloud Infrastructure (OCI) for “inference and other needs”, the company said at the time.
This partnership fueled speculation about an emerging rift with Microsoft, prompting OpenAI to issue a statement claiming its “strategic cloud relationship with Microsoft is unchanged”.
OpenAI’s for-profit conundrum
OpenAI has faced significant pushback in its shift to become a for-profit entity.
In December 2024, the company proposed establishing itself as a Public Benefit Corporation (PBC). This would mean the nonprofit will hold shares in the company but have little influence.
A second push to split commercial operations and become a for-profit company was scrapped in May following pressure from industry stakeholders, regulators, and former employees such as Elon Musk.
The Tesla and SpaceX chief executive filed a legal challenge to block the move, claiming it disregarded and ran counter to the company’s founding principles.
In a blog post at the time, OpenAI confirmed the nonprofit would “stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware”.
Make sure to follow ITPro on Google News to keep tabs on all our latest news, analysis, and reviews.
MORE FROM ITPRO
-
Kids hacking for kicks are causing security headaches at schoolsNews More than half of cyber incidents at schools are caused by students, with some tech-savvy pupils attempting to bypass security and network controls.
-
Kaseya targets new growth with double C-suite appointmentNews Anthony Anzevino joins the security vendor as chief revenue officer, while Pratik Wadher takes the role of chief technology officer
-
Box reveals new AI capabilities at BoxWorks 2025News Extract and Automate will help businesses make better use of their data, the cloud company claims
-
Large enterprises could be wavering on AI adoptionNews AI adoption rates have dipped, but it's probably nothing to worry about for IT leaders
-
Businesses are being taken for fools with AI agentsOpinion AI agents are still not very good at their 'jobs', or at least pretty terrible at producing returns on investment – yet businesses are still buying into the hype.
-
Google boasts that a single Gemini prompt uses roughly the same energy as a basic search – but that’s not painting the full pictureNews Google might claim that a single Gemini AI prompt consumes the same amount of energy as a basic search, but it's failing to paint the full picture on AI's environmental impact.
-
Mistral AI wants businesses to make new memories with Le ChatNews The company hopes new functionality and Connection Partners will broaden business appeal
-
Salesforce CEO Marc Benioff says the company has cut 4,000 customer support staff for AI agents so farNews The jury may still be out on whether generative AI is going to cause widespread job losses, but the impact of the technology is already being felt at Salesforce.
-
This Stanford study shows AI is starting to take jobs – and those identified as highest risk are eerily similar to a recent Microsoft studyNews AI may already be impacting early-career jobs, particularly roles featuring tasks that can be automated like software developers or customer service, according to Stanford researchers.
-
Jensen Huang says 'the AI race is on' as Nvidia shrugs off market bubble concernsNews The Nvidia chief exec appears upbeat on the future of the AI market despite recent concerns
