Highlights
OpenAI is set to cut its revenue share with Microsoft significantly as part of its strategic transformation, reducing it from 20% to around 10% by the end of this decade. This information comes from a report by The Information, which states that OpenAI has communicated these plans to its investors.
Strategic Shift and Changes in Control
This decision follows OpenAI’s retreat from a previous plan that aimed to strengthen CEO Sam Altman’s control over the organisation. Instead, governance authority will remain with its nonprofit parent, thereby limiting Altman’s influence within the company.
Microsoft’s Investment and Partnership
Microsoft, being OpenAI’s primary investor, has invested a substantial $13.75 billion into the AI company. This includes a pivotal $10 billion agreement announced in early 2023. As per the existing arrangement which is set to conclude in 2030, OpenAI currently shares 20% of its revenue with Microsoft. However, internal financial documents and updates provided to investors suggest a reduction of this percentage to 10% for Microsoft and other commercial alliances by 2030.
Commitment to Ongoing Collaboration
Despite this major shift, both organisations have reiterated their commitment to sustaining the partnership. Microsoft, which incorporates OpenAI’s models in its products like Copilot and exclusively hosts OpenAI’s APIs on Azure, has assured that the fundamental aspects of the collaboration will persist throughout the contractual period. “The key elements of our partnership remain in place for the duration of our contract through 2030, with our access to OpenAI’s IP, our revenue sharing arrangements and our exclusivity on OpenAI’s APIs all continuing forward,” stated Microsoft.
Future Developments and Initiatives
In January, Microsoft made changes to its agreement with OpenAI following the announcement of a $500 billion AI data centre initiative in cooperation with Oracle and Japan’s SoftBank Group. Reports indicate that Microsoft is eager to retain access to OpenAI’s technology beyond the current contract duration.
“OpenAI is continuing to collaborate closely with Microsoft and looks forward to finalising the details of this recapitalisation soon,” said an OpenAI spokesperson in response to the recent developments.
