Microsoft and OpenAI Partnership could Be Rethinking Phase

Published: May 13, 2025

Microsoft and OpenAI Partnership: The partnership appears to be entering a reassessment phase as both companies explore new directions in the evolving AI landscape.

Over the past few years, Microsoft and OpenAI have forged one of the most influential artificial intelligence (AI) alliances.

Microsoft invested over $13 billion into OpenAI and integrated its models into a wide range of products, from Microsoft Azure to Bing and Microsoft 365 Copilot.

However, recent developments suggest that this relationship may be under review.

Table of Content

The AI Dream Team - Microsoft and OpenAI Partnership
Rising Costs and Cloud Shifts
Microsoft is Building Its Own AI Powerhouse
Governance and Control Issues
What This Means for the AI Industry
Final Thoughts - A Partnership at a Crossroads
FAQs

The AI Dream Team – Microsoft and OpenAI Partnership

Microsoft started working closely with OpenAI in 2019. Over time, it invested over $13 billion in the company, which was a game-changer.

In return, Microsoft used OpenAI’s powerful tech, like GPT-4, the brains behind ChatGPT.

That’s why you see AI features popping up in:

Microsoft Word and Excel (yep, that’s Copilot)
Bing search
GitHub
Azure cloud services

But now, both companies are reportedly talking seriously about changing the deal. They’re trying to figure out:

How to split money fairly
How Microsoft uses OpenAI’s tools
Whether OpenAI should keep using only Microsoft’s cloud (Azure)

This partnership helped Microsoft become a leading name in AI, giving OpenAI the computing power and financial support it needed to grow quickly.

Rising Costs and Cloud Shifts

Running large AI models is expensive. OpenAI is expected to lose around $5 billion this year due to the high cost of computing, training, and running its AI systems. To manage these costs, OpenAI is:

Negotiating with Oracle to also use its cloud platform
Trying to get cheaper rates from Microsoft’s Azure service

This means OpenAI could be less dependent on Microsoft’s cloud infrastructure.

Also, as demand for AI continues to grow, other tech companies like Amazon and Google are investing heavily in their own cloud-AI combinations.

This puts more pressure on Microsoft and OpenAI to stay competitive.

Microsoft is Building Its Own AI Powerhouse

Microsoft seems to be preparing for a future where it doesn’t rely only on OpenAI.

In 2024, it hired Mustafa Suleyman, a cofounder of DeepMind (Google’s AI lab) and Inflection AI. Microsoft also brought in much of Inflection’s staff and AI technology.

This move shows that Microsoft is serious about building its AI tools and models, even as it continues working with OpenAI.

Microsoft wants to:

Build its own consumer AI products
Develop independent AI models for the future
Reduce risk by not depending on a single partner

Governments and regulators are also monitoring the situation closely.

The U.S. Federal Trade Commission (FTC) and the UK’s Competition and Markets Authority (CMA) are investigating whether Microsoft has too much control over OpenAI.

In April 2024, the CMA said that the partnership does not count as a merger, which reduced some legal pressure.

However, concerns remain, especially around competition and fairness in the fast-growing AI market.

Governance and Control Issues

Things are getting complicated because OpenAI is not a regular tech company.

It’s a “capped-profit” company, which means it was set up to prioritize safety and benefit to humanity, not just profit.

Microsoft owns a significant share of OpenAI’s for-profit arm but doesn’t control the company. Reports suggest that Microsoft wants:

A seat on OpenAI’s board
More say in business decisions
Clarity about its return on investment

Meanwhile, OpenAI is considering an initial public offering (IPO) in the future. If that happens, the company structure and its deals with Microsoft might need to be revised.

What This Means for the AI Industry

These changes could affect many parts of the tech world:

Startups and developers who rely on Microsoft’s Azure OpenAI Service might face changes in access or pricing.
Big tech rivals like Google, Amazon, and Meta could benefit if the partnership weakens.
Investors and regulators will watch closely to see if this signals larger shifts in the AI ecosystem.

This also raises questions like:

Will AI partnerships stay strong in the long term?
Should tech companies build AI in-house or through collaboration?
How will the balance between safety, innovation, and profit be managed?

Final Thoughts – A Partnership at a Crossroads

Microsoft and OpenAI have been central to the AI revolution, but even strong partnerships can face challenges.

Both sides are clearly re-evaluating their relationship, whether it’s due to money, strategy, or company control.

While no major split has occurred yet, the outcome of these discussions will likely shape the next phase of AI development for businesses, developers, and users worldwide.

FAQs

Why are Microsoft and OpenAI renegotiating their partnership?

Microsoft and OpenAI are reviewing their original deal to better align with OpenAI’s future goals, especially its potential IPO. The original terms were set back in 2019, and much has changed. Both companies want to clarify ownership, revenue sharing, and access to AI technologies.

What changes are being discussed in the Microsoft–OpenAI deal?

They’re discussing how long Microsoft will keep exclusive access to OpenAI’s tools, how much revenue Microsoft gets, and whether it will maintain its large equity stake. OpenAI may also seek more freedom to work with other cloud providers. These changes could make their partnership more balanced.

How much has Microsoft invested in OpenAI?

Microsoft has invested over $13 billion in OpenAI since 2019. This investment gave Microsoft access to OpenAI’s models like GPT-4, which it uses in products like Copilot and Azure AI. It’s one of the biggest bets on artificial intelligence ever made.

Is OpenAI planning to go public?

Yes, OpenAI is considering an IPO soon. To do this, it’s trying to restructure its company and make its ownership model more attractive to new investors. This is one of the key reasons behind Microsoft’s current renegotiation.

What does the OpenAI IPO mean for Microsoft?

If OpenAI goes public, Microsoft’s financial and strategic position might change. Microsoft may reduce its equity stake but still wants access to OpenAI’s AI models. The IPO could also lead to more transparency and faster growth for OpenAI.

Will Microsoft still have access to OpenAI’s models like GPT-4?

Yes, Microsoft wants to keep using OpenAI’s AI models even after the current deal ends in 2030. The renegotiated terms will likely ensure that Microsoft continues to benefit from GPT-4 and future models for its products and cloud services.

Is OpenAI still using Microsoft Azure as its main cloud provider?

For now, yes—OpenAI uses Microsoft Azure to power many of its services. However, it’s reportedly looking into other cloud providers like Oracle to reduce dependency and cut costs. This may impact Microsoft’s role in hosting OpenAI’s future workloads.

Why is OpenAI talking to Oracle about cloud services?

OpenAI is exploring Oracle as a possible secondary cloud provider to save money and improve flexibility. AI models require huge computing power, and diversifying cloud partners could reduce risks and expenses. This move also signals that OpenAI wants to be less tied to Azure.

What is Microsoft doing to reduce its dependence on OpenAI?

Microsoft has hired top AI talent from companies like DeepMind and Inflection AI to build its own models. It’s also investing in AI research and infrastructure independently. This gives Microsoft a backup plan if OpenAI changes its direction.

Who controls OpenAI — Microsoft or its board?

OpenAI is controlled by a nonprofit board, not Microsoft. Even though Microsoft owns a large stake in the for-profit arm, it doesn’t have voting rights or direct control over decisions. This governance model is designed to prioritize AI safety and ethics.

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