Written by: Micah Abiodun, Cryptopolitan
OpenAI is expected to reduce payments to Microsoft by approximately $97 billion by 2030, following the renegotiation of their cooperation agreement in October last year.
This figure highlights the financial impact of the agreement adjustments disclosed by both parties in October last year; on the 5th of the same month, OpenAI transitioned into a Public Benefit Corporation supervised by its non-profit foundation.
OpenAI had originally committed to allocating 20% of its revenue to Microsoft before 2030, a commitment that could have accumulated up to $135 billion.
The revised new terms impose limits on such revenue-sharing payments and decouple them from Artificial General Intelligence (AGI) milestones; previously, such milestones could have triggered higher payments.
OpenAI lowers Microsoft's revenue share ratio
OpenAI Chief Financial Officer Sarah Friar told investors that by 2030, the company expects to share approximately 8% to 10% of its revenue in total with all partners, including Microsoft, down from the current 20%.
This decline stems from two fundamental changes: a reduced sharing ratio, and a clear cap placed on the total payment amount.
The previous agreement included an AGI clause: if an independent panel determined that OpenAI had achieved AGI, the clause could have significantly altered the financial arrangements between the two parties.
Under the revised terms, although AGI certification will still terminate certain rights of Microsoft regarding OpenAI's research-related intellectual property, it no longer triggers an increase in the revenue-sharing ratio.
Content of the agreement restructuring
According to a report by Cryptopolitan in October last year, this restructuring granted Microsoft a 27% equity stake in OpenAI Group PBC, valued at approximately $135 billion; in exchange, OpenAI committed to purchasing $250 billion worth of Azure cloud services.
Microsoft will also retain related intellectual property access rights until 2032.
OpenAI expands cloud service options
The renegotiated agreement removed Microsoft's status as OpenAI's exclusive cloud computing service provider.
According to a company announcement, OpenAI's products will still be prioritized for release on Azure, "unless Microsoft is unable and chooses not to provide the required capacity."
However, at the same time, OpenAI is now also permitted to offer related services to enterprises through Amazon Web Services (AWS) and Google Cloud.
This change has already sparked some tensions. The Financial Times reported that Microsoft considered legal action against Amazon and OpenAI over a $50 billion agreement; this agreement granted exclusive third-party cloud service rights to OpenAI's Frontier enterprise AI platform.
Microsoft believes the cooperation requires OpenAI's API products to run on Azure, while OpenAI argues that Frontier is a non-API service and can therefore be deployed on other platforms.
Microsoft replaces revenue sharing with equity and access rights
Under the new arrangement, Microsoft will no longer receive proportional revenue sharing from OpenAI.
Microsoft's primary returns now include: a 27% equity stake, OpenAI's commitment to purchasing $250 billion in Azure services, and intellectual property access rights until 2032.
Wedbush analyst Dan Ives described the restructuring as "generally beneficial for Microsoft," because the agreement "ensures Microsoft's control over OpenAI's technology for the next six years," while also reducing structural uncertainty in this long-term partnership.
Furthermore, the Financial Times also reported that Amazon is considering investing up to $50 billion in OpenAI as part of a larger strategic collaboration, indicating that OpenAI's cloud service diversification is changing the investment landscape beyond Microsoft.
Paving the way for a potential IPO
OpenAI is also preparing for a possible initial public offering (IPO) in the fourth quarter.
Dan Ives believes that Azure's exclusivity and the revenue-sharing upgrade clauses tied to AGI were previously major structural obstacles hindering OpenAI's public listing.
