Microsoft (MSFT) has ended its exclusive artificial intelligence model supply agreement with OpenAI, allowing enterprise GPT services to be used on Amazon Web Services (AWS) and Google Cloud. After Amazon neutralized Microsoft's exclusivity earlier this year by signing a service supply agreement with OpenAI, Microsoft chose guaranteed revenue over confrontation.
OpenAI and Microsoft announced Thursday local time that they had agreed to convert Microsoft's exclusive AI model usage rights into a non-exclusive license.
OpenAI will now be able to supply models, previously exclusive to Microsoft's Azure cloud, to Microsoft's competitors as well. A cap has been placed on the revenue-sharing payments that OpenAI had been making to Microsoft from sales of its own developed products, reducing the amount.
Microsoft will retain intellectual property (IP) licenses for OpenAI models and products until 2032, but the terms will shift from exclusive to non-exclusive. However, OpenAI will launch new products first on Microsoft's Azure.
In exchange for ending exclusivity, Microsoft will not pay OpenAI revenue from OpenAI model sales on Azure through 2030. Under the previous arrangement, OpenAI was to allocate 20% of OpenAI model sales revenue to Microsoft until OpenAI developed artificial general intelligence (AGI). In effect, Microsoft will keep through 2030 the 20% of revenue it had been paying to OpenAI.
Meanwhile, OpenAI will be able to supply AI services under its contract with AWS. The two companies announced in February that they would run OpenAI model-based services on AWS and provide an enterprise AI service called "Frontier," but Microsoft had considered legal action, arguing that this violated the exclusive contract. AWS Chief Executive Officer Andy Jassy said on social media Thursday that "within a few weeks, OpenAI models will be available on Bedrock," referring to the AWS AI model platform.
Microsoft has continued investing in OpenAI since 2019 and became the second-largest shareholder with a 27% stake after OpenAI restructured into a public benefit corporation (PBC) in October last year.
