Microsoft and OpenAI clash over future control of advanced AI models

The strong partnership between Microsoft and OpenAI is under stress, as disagreements over a critical clause tied to artificial general intelligence (AGI) threaten to upend one of the most consequential relationships in the world of AI, The Information reported on June 25. At the heart of the dispute lies a provision in their multi-billion-dollar agreement that allows OpenAI to restrict Microsoft’s access to its technologies upon declaring the achievement of AGI. The clause, agreed upon in 2019 when AGI seemed like a distant possibility, is now being reconsidered as OpenAI executives, including CEO Sam Altman, believe the company is on the verge of reaching that milestone.

Microsoft, which has invested over $10 billion into OpenAI and integrated its models into Azure and key software products, is demanding that the AGI clause be removed. OpenAI, however, has so far refused. Under the current agreement, OpenAI’s board can declare AGI in “good faith”, at which point Microsoft’s privileged access could be cut off. Microsoft chief executive Satya Nadella has publicly expressed scepticism over such a declaration, calling self-claimed AGI benchmarks “nonsensical”. The disagreement not only reflects diverging views on AGI itself but also highlights rising commercial tension between the two companies as OpenAI transitions toward a for-profit structure.

Access, equity, and control

The AGI clause is complicating OpenAI’s attempts to convert its for-profit arm into a public-benefit corporation, a move that requires Microsoft’s approval. Talks have dragged on for months, with both parties staking out hard positions. Microsoft is reportedly open to taking a 35 per cent equity stake in the new structure but insists on longer-term access to OpenAI’s intellectual property, even beyond any AGI declaration.

The issue is further complicated by exclusivity clauses that currently prevent OpenAI from offering its tools to other cloud providers. Microsoft controls key aspects of OpenAI’s IP and hosts its models exclusively on Azure. If AGI, or what OpenAI calls “sufficient AGI”, is declared and Microsoft signs off, OpenAI would be allowed to license its models more broadly.

For now, the talks continue, with both sides publicly projecting unity. “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 and Microsoft said in a joint statement emailed to Reuters.