Since 2019, Microsoft and OpenAI have shared a vision to responsibly advance artificial intelligence and make its benefits widely available. What began as an investment in a research organization has grown into one of the most successful partnerships in our industry. As we enter the next phase of this partnership, we have signed a new definitive agreement that builds on our foundation, strengthens our partnership and sets the stage for long-term success for both organizations.
First, Microsoft supports the OpenAI board moving forward with the formation of a public purpose company (PBC) and recapitalization. Following the recapitalization, Microsoft has an investment in OpenAI Group PBC valued at approximately $135 billion, representing approximately 27 percent on an as-converted diluted basis, including all owners – employees, investors and the OpenAI Foundation. Excluding the impact of OpenAI’s latest funding rounds, Microsoft held a 32.5 percent stake on an as-converted basis in OpenAI for-profit.
The agreement preserves key elements that have fueled this successful partnership – meaning that OpenAI will remain Microsoft’s frontier model partner and Microsoft will continue to have exclusive IP rights and Azure API exclusivity until Artificial General Intelligence (AGI).
It also refines and adds new provisions that allow each company to independently continue to foster innovation and growth.
What has evolved:
- Once AGI is declared by OpenAI, this declaration will now be verified by an independent panel of experts.
- Microsoft’s IP rights for both models and products have been extended to 2032 and now include models after AGI with appropriate safety railings.
- Microsoft’s research IP rights, defined as the confidential methods used in the development of models and systems, will remain until either the expert panel verifies the AGI or until 2030, whichever comes first. Research IP includes e.g. models intended for internal implementation or research only. In addition, research IP does not include model architecture, model weights, inference code, fine-tuning code, and any IP related to data center hardware and software; and Microsoft retains these non-research IP rights.
- Microsoft’s IP rights now exclude OpenAI’s consumer hardware.
- OpenAI can now jointly develop some products with third parties. API products developed with third parties will be exclusive to Azure. Non-API products can be served on any cloud provider.
- Microsoft can now independently pursue AGI alone or in partnership with third parties.
- If Microsoft uses OpenAI’s IP to develop AGI before the AGI is declared, the models will be subject to computational thresholds; these thresholds are significantly larger than the size of systems used to train leading models today.
- The revenue sharing agreement will remain in place until the expert panel verifies the AGI, although the payments will be made over a longer period of time.
- OpenAI has entered into a contract to buy an incremental 250 billion USD of Azure services, and Microsoft will no longer have the right of first refusal to be OpenAI’s computing provider.
- OpenAI can now provide API access to US government security customers, regardless of cloud provider.
- OpenAI is now able to release open weight models that meet the required capability criteria.
As we enter this next chapter of our partnership, both companies are better positioned than ever to continue building great products that meet real needs and create new opportunities for everyone and every business.