The position created by the partnership between OpenAI and Microsoft has become even less committed. And a clause about artificial general intelligence, which has dictated the future of their deal for years, has officially been removed.
On Monday morning, Microsoft announced some big changes to its long-standing OpenAI deal. Microsoft will “remain OpenAI’s primary cloud partner, and OpenAI products will ship first on Azure, unless Microsoft cannot support the required capabilities and chooses not to.” But OpenAI “can now serve all of its products to customers of any cloud provider.” This allows OpenAI to achieve its goals of courting business customers as it reportedly prepares to go public – opening the door to working with Amazon or Google, for example, and trying to relieve restrictions on its computers that have led to disputes with Microsoft. It appears that Microsoft is still getting a cut of the revenue from these outside agreements.
Perhaps more notably, both companies eliminated the contract’s “AGI clause,” which set out a variety of conditions if either of them acquired “artificial general intelligence.” (This is a vaguely defined industry term that generally means AI systems that equal or surpass human intelligence across a wide range of tasks.)
This change affects the revenue-sharing agreement, which was to remain in place until AGI was declared. But now, the revenue-share payments coming to Microsoft from OpenAI will only continue until 2030 – and although they will continue “at the same percentage”, they will also be “subject to an aggregate cap” rather than continuing indefinitely. Payments will also continue and then end “independent of OpenAI’s technology advancements”, which includes AGI under any reasonable logic. So RIP to that deal.
This is the second reconsideration of the section. When OpenAI completed its controversial profit-making restructuring in October, it needed Microsoft’s blessing — and in the process of getting that blessing, the two companies struck a new deal. Before the October contract change, Microsoft would have lost its rights to OpenAI’s technology once its technology reached AGI. But Microsoft’s IP rights to OpenAI’s models and products were extended to 2032 – and Microsoft’s rights included the models after An independent panel declares in principle that the AGI has been reached.
Now, there is no independent panel, no ‘if-this-then-that’ language for if or when AGI will be announced, and if OpenAI reaches that milestone it may never actually have to be announced. Microsoft’s license for OpenAI models and products now extends until 2032 non exclusive. Now any other contestant can join it.
Microsoft previously owned approximately 27 percent (“on an as-converted diluted basis, including all owners”) in the public benefit corporation. The new terms state that “Microsoft continues to participate directly in the development of OpenAI as a major shareholder” but do not stipulate Microsoft’s ownership stake, although there is also no indication of a change.
OpenAI is under pressure to get closer to turning a profit, and it and its competitors are wasting a lot of investor cash trying to achieve more compute and reach AGI. OpenAI has said it is moving to enterprise and coding to pursue those bigger potential revenue drivers, and it is systematically cutting so-called “side quests” such as Sora and ChatGPT’s planned erotica features. It also reorganized its science department. The new deal with Microsoft is another step.
