Photo by Andrew Neel on Unsplash
Something’s shifting between two of the biggest players in AI—and it’s not just code. On Thursday, OpenAI and Microsoft announced they’ve signed a non-binding agreement to revisit the terms of their high-stakes partnership. That means they’re not just working side by side anymore—they’re renegotiating what that relationship should even look like.
Why does this matter? Well, these two companies have been deeply tied since Microsoft first backed OpenAI with a multibillion-dollar investment back in 2019. Fast forward to now, and OpenAI’s valued at about $500 billion. Yes, with a “b.”
But here’s the thing: they’re not just partners anymore. They’re also becoming rivals.
Wait—aren’t Microsoft and OpenAI supposed to be on the same team?
They’ve been close collaborators for years. Microsoft has reportedly sunk more than $13 billion into OpenAI, giving it access to key AI models and technology. Meanwhile, OpenAI has leaned on Microsoft’s Azure cloud for the massive computing power needed to train and run its models.
But the relationship has gotten complicated.
Photo by Andrew Neel on Unsplash
For starters, OpenAI is now trying to restructure itself—from its nonprofit roots into something closer to a for-profit business, specifically a public benefit corporation. That move requires Microsoft’s sign-off, and regulators in California and Delaware are still reviewing if the shift is above board. Some charities are even urging the states to block OpenAI’s transformation altogether.
Then there’s the AGI clause. Microsoft’s access to certain OpenAI technology could be limited once the company hits so-called “AGI”—artificial general intelligence. That’s a fuzzy term, but in this case, both companies define it as an AI system capable of generating at least $100 billion in profits. That’s…a lot.
So what’s this new agreement all about?
It’s a formal way of saying: We know things are changing, and we’re trying to figure it out together.
Both companies released a joint statement saying they’ve signed a “non-binding memorandum of understanding” (aka MOU) to explore the next phase of their partnership. It’s not a finalized contract yet, but they’re working toward it.
Their focus, they say, is still on delivering top-tier AI tools without losing sight of safety and responsibility. But behind the scenes, it looks like there’s a delicate balancing act playing out—each side wants the benefits of being aligned, but neither wants to be totally dependent on the other.
The competition behind the curtain
Microsoft is no longer OpenAI’s exclusive cloud provider. That special status ended earlier this year. Under the updated terms, Microsoft has a “right of first refusal” for compute capacity, but OpenAI is now free to build with others. And it is.
OpenAI has inked deals outside the Microsoft circle, including joining the massive $500 billion Stargate infrastructure project with Oracle and SoftBank. Microsoft, on the other hand, has started hosting models from Meta, DeepSeek, and even Elon Musk’s xAI on Azure.
Photo by Andrew Neel on Unsplash
That diversification on both sides is a clear sign: neither wants to put all their eggs in one basket.
Behind the scenes: Money, mission, and momentum
This all feeds into a bigger question facing the AI world: How do you scale a technology meant to benefit humanity while chasing profits that could run in the hundreds of billions?
OpenAI’s original nonprofit status was meant to keep that goal in check. But critics—including Elon Musk, who’s now suing to stop the restructuring—argue that the company is drifting too far from its mission. Former employees and regulators have echoed those concerns.
In response, OpenAI scrapped its plan to fully convert to a for-profit earlier this year. Instead, its new model gives the nonprofit board majority control, while spinning off the rest as a public-benefit corporation. That way, they argue, they can keep their ethical compass intact while going after more sustainable growth. Bret Taylor, OpenAI’s chairman, said the nonprofit’s stake in the new structure could be worth more than $100 billion.
What’s next?
Microsoft and OpenAI are clearly trying to evolve this partnership without breaking it. And for good reason: Their futures are still tightly interwoven. Microsoft recently disclosed that its Azure business is now pulling in $75 billion a year—much of that driven by hosting and running OpenAI tech.
But the AI landscape’s moving fast. And even as they renegotiate terms and reshuffle alliances, one thing is clear: both companies are positioning themselves not just to compete in the AI race, but to define the rules of the game.
We’ll keep watching what happens next. Because when two AI giants move, the rest of the tech world shifts with them.
Keywords: OpenAI, Microsoft, AI partnership, Azure, artificial intelligence, OpenAI restructuring, public benefit corporation, AGI, compute capacity, Stargate Project, OpenAI valuation, Microsoft investment
