Tech giant Microsoft is allegedly considering a deal that would enable it to maintain access to critical OpenAI technology in the future. The report also revealed that negotiators from both companies could finalize an agreement in the coming weeks.
Bloomberg reported Tuesday, citing two people familiar with the matter, that Microsoft is seeking to leverage the deal to remove an obstacle that limits it from becoming a for-profit enterprise. The tech firm’s CEO, Sam Altman, also had discussions earlier this month at the Allen & Co. conference in Sun Valley, Idaho, about restructuring the company.
OpenAI seeks to restructure from a nonprofit firm
The report disclosed that OpenAI’s restructuring plans face other hurdles, such as the lawsuit filed by its co-founder, Elon Musk. Musk accused Altman of defrauding investors and diverting from the company’s initial goal – to develop AI for the good of humanity, not corporate profit.
According to the report, talks about OpenAI’s future as a for-profit company have continued for months and have put a tight spot on Microsoft, which invested around $13.75 billion. The source also disclosed that both firms have been negotiating Microsoft’s stake in a restructured OpenAI, hinting at an equity stake for Microsoft at around 30%.
The software giant’s investment allows it to use OpenAI’s intellectual property, but the size of its stake in the company remains an issue. The source also acknowledged that Microsoft wants to avoid losing access to the firm’s technology before the current deal expires in 2030.
The software giant is in charge of developing the hardware used in the language models behind ChatGPT. In exchange, the ChatGPT maker allowed Microsoft to integrate its AI technology into its software offerings. Things took a turn with Microsoft’s faith in its partner after the OpenAI board fired Altman in November 2023 and later rehired him.
OpenAI has been trying to loosen its dependence on Microsoft by collaborating with rival companies to build data centers and other AI infrastructure. The report revealed that the tech firm seeks to alter its nonprofit structure, in part to secure more funding to establish additional data centers to power its AI models.
SoftBank announced early this year a commitment of tens of billions of dollars, but has reverted and said it could reduce the amount if OpenAI’s restructuring isn’t completed by the end of the year.
The report also revealed that OpenAI has sought adjustments to Microsoft’s access to its intellectual property in a bid to get a bigger share of the revenue shared with the company. OpenAI wants to position its business with whatever share of revenue and equity Microsoft receives. The initiative aims to help the company guarantee its nonprofit will be well-resourced with a significant stake in OpenAI.
OpenAI’s AGI clause comes into question in the negotiations
Both tech companies have also discussed new terms in OpenAI’s current contract with the tech giant. The source argued that technical or business milestones can trigger the current contract’s clauses regarding AGI.
The report noted that the new terms would eliminate a clause meant to exclude Microsoft from some rights to the startup’s technology when it attains artificial general intelligence (AGI). Under the current contract, the software giant is also barred from pursuing AGI technology, which surpasses human intelligence.
The contract also states that once the OpenAI board determines that the company has reached AGI, Microsoft would lose access to the company’s technology developed at that point. The software company would also lose rights to products developed before that trigger.
The new agreement would not limit the software giant from using OpenAI’s latest models and technology even if it achieves AGI. The Information also reported last month that both tech giants were at odds over the AGI clause.
Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.
