Microsoft is ready to walk away from tough talks with OpenAI if they cannot agree on key issues, the Financial Times reported Thursday, citing sources close to the matter.
The negotiations focus on OpenAI’s plan to change from a non-profit to a for-profit company. This change needs Microsoft’s approval and could bring new funding and a chance for OpenAI to go public.
Microsoft has invested over $13 billion in OpenAI. The two companies are discussing Microsoft’s stake in the new company, with offers ranging from 20% to 49%, according to the report.
If no deal is reached, Microsoft will stick to its current contract, which lets it use OpenAI’s technology until 2030.
Both companies say they are negotiating in good faith and hold daily meetings. In a joint statement, they said, “We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing, and we are optimistic we will continue to build together for years to come.”
OpenAI faces pressure to complete the transition by the end of the year. If it fails, it risks losing billions in funding from investors like SoftBank.
The talks also involve revising Microsoft’s 2019 commercial agreement with OpenAI. This deal gives Microsoft exclusive rights to sell OpenAI’s models and a 20% share of revenues up to $92 billion. Microsoft is hesitant to change these terms, especially if it means losing revenue share or access to OpenAI’s technology.
The partnership has grown tense due to disagreements over computing resources and control of future AI infrastructure. Microsoft has also started offering other AI models, like Elon Musk’s xAI Grok, on its Azure platform.
Other contract terms under review include Microsoft’s exclusive rights to sell OpenAI software on Azure and its first option to provide infrastructure. A clause giving Microsoft early access to OpenAI’s technology before “artificial general intelligence” may be removed.
The restructuring will need regulatory approval and faces legal challenges, including one from Elon Musk, supported by some former OpenAI employees.
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