If you’ve read about the Microsoft-OpenAI relationship over the past few years, you’d know that apart from its financial investments, Microsoft was also the exclusive cloud infra provider to OpenAI. While the former is still there, the latter will not be true anymore. Microsoft has now announced a change in its partnership with OpenAI, moving away from its previous exclusive role as the cloud provider for OpenAI’s computing needs. The new deal now includes a “right of first refusal” (ROFR) for Microsoft, and comes in the wake of OpenAI’s recent announcements about the Stargate Project.
Microsoft has been one of OpenAI’s biggest backers for years, initially providing the infrastructure for OpenAI’s computational needs via its Azure cloud platform. For years, Microsoft was the exclusive provider of cloud services, supporting the development and training of OpenAI’s advanced AI models. However, OpenAI’s infrastructure needs have changed, prompting the AI firm to now seek out other cloud providers. As part of the newly amended agreement, Microsoft retains the first right to provide cloud resources to OpenAI, but OpenAI now has the option to turn to other cloud providers, such as Oracle, should Microsoft be unable to meet its needs.
Under the new structure, OpenAI will be able to build out additional cloud capacity, particularly for its research and model training efforts. Prior to his development, OpenAI has often pointed to a shortage of computing resources as a limiting factor in its product development, which has in some cases delayed the rollout of new AI models and tools. This has led to tensions between OpenAI and Microsoft, especially with the growing demand for resources that outpaces Microsoft’s ability to supply them. This changes now.
“In addition to this, OpenAI recently made a new, large Azure commitment that will continue to support all OpenAI products as well as training. This new agreement also includes changes to the exclusivity on new capacity, moving to a model where Microsoft has a right of first refusal (ROFR). To further support OpenAI, Microsoft has approved OpenAI’s ability to build additional capacity, primarily for research and training of models,” the tech behemoth announced in a blog post. “Microsoft has rights to OpenAI IP (inclusive of model and infrastructure) for use within our products like Copilot. This means our customers have access to the best model for their needs,” the blog post read, adding that the OpenAI APIs (which power products like Copilot) remain “exclusive to Azure, runs on Azure and is also available through the Azure OpenAI Service. This agreement means customers benefit from having access to leading models on Microsoft platforms and direct from OpenAI.”
The timing of this shift in the Microsoft-OpenAI relationship comes at the same time as the reveal of the Stargate Project, a major joint venture that aims to set up new AI data centers across the United States. This joint venture involves OpenAI, Oracle, SoftBank, and Nvidia, and it is expected to inject up to $500 billion into developing the necessary infrastructure to support next-gen AI models, as well as meet the ever-increasing computing demands required to train and deploy advanced AI systems.
