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OpenAI is conducting contract renegotiations with Microsoft to enable their upcoming IPO while addressing Microsoft’s $13 billion stake through equity terms. The companies are updating an existing contract while handling rising competition and partnership dynamic tensions.
Report: Microsoft Prioritizing Long-Term ChatGPT Access Over Higher Equity in OpenAI
According to Financial Times, OpenAI is engaged in ‘high-stakes negotiations’ with Microsoft to modify its contractual terms which will prepare the AI startup for an upcoming initial public offering (IPO). Microsoft remains one of the main opponents to OpenAI’s new plan to transform its for-profit division into a public benefit corporation (PBC).
The most important negotiation point reportedly centers on determining how much equity Microsoft AI will obtain within the new entity after its over $13 billion investment in OpenAI. The two companies allegedly reconsider the terms of an original agreement from 2019 when Microsoft first invested $1 billion into OpenAI.
The existing agreement gives Microsoft access to OpenAI’s intellectual property which includes new models and products and Microsoft will also earn revenue from product chatgpt app sales until 2030.
Microsoft makes extensive use of OpenAI technology for its software products and supplies OpenAI with significant computing power for training its AI models.
The competition between OpenAI and Microsoft has intensified recently because OpenAI is expanding its ambitions. OpenAI has launched initiatives towards enterprise clients alongside its collaboration with SoftBank and Oracle led by Larry Ellison on Project Stargate which aims to construct a $500 billion AI infrastructure throughout the United States.
A senior Microsoft employee revealed to FT that differences in style contribute to the tensions between the two companies. OpenAI says to Microsoft ‘gives us money and compute and stay out of the way: OpenAI’s direction to Microsoft to remain supportive but unobtrusive during their partnership created natural tensions.
The employee admitted that such an attitude from a partner displays arrogance.
A person close to ChatGPT AI revealed to the publication that Microsoft remains committed to the success of the conversion. The situation has not deteriorated into total chaos with open warfare between the companies. The negotiation presents serious challenges yet we trust we will accomplish our goal.
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