Microsoft is no longer the exclusive supplier of processing power to the artificial intelligence startup OpenAI, despite being its largest investor and primary cloud partner.
TakeAway Points:
- Microsoft will no longer be the only company offering OpenAI processing power.
- Microsoft stated that it will now have the “right of first refusal” in the event that OpenAI requests additional processing power.
- When President Donald Trump announced the Stargate Project, a joint venture with OpenAI, Oracle, and Softbank, the shift in their relationship was revealed.
No exclusive cloud supplier for OpenAI
In a blog post on Tuesday, Microsoft said that it’s still in a favourable position with OpenAI. Going forward, when OpenAI seeks additional capacity, Microsoft will have the “right of first refusal” before OpenAI checks with other parties.
The change in their relationship was disclosed as part of President Donald Trump’s announcement of the Stargate Project, a joint venture with OpenAI and Oracle
and Softbank to invest billions of dollars in AI infrastructure in the U.S. Executives from those companies committed to invest an initial $100 billion and up to $500 billion over the next four years in the project, which will be set up as a separate company.
Oracle is a “key initial technology partner” alongside Arm, Microsoft and Nvidia in setting up data center infrastructure, OpenAI said in a blog post.
“The data centers are actually under construction,” Oracle Chairman Larry Ellison said at a press conference at the White House, alongside Trump. “The first of them are under construction in Texas. Each building is half a million square feet. There are 10 buildings currently being built, but that will expand to 20 and other locations beyond the Abilene location, which is your first location.”
Oracle shares jumped 7% on Tuesday.
Microsoft’s deal with OpenAI
In 2019, three years before the launch of ChatGPT, Microsoft invested $1 billion in OpenAI, which committed to moving its services to Azure. As OpenAI’s computing needs expanded, Microsoft signed contracts with third-party cloud providers, such as CoreWeave, to supplement its Azure cloud infrastructure.
Oracle entered the mix last year. The database software maker, which trails Amazon, Microsoft and Google in the cloud market, said in June that Microsoft’s Azure AI platform would be extended to Oracle’s cloud.
OpenAI said on Tuesday that it will continue to increase consumption of Azure, and Microsoft said OpenAI recently made “a new, large Azure commitment” for products and model training. Microsoft still has rights to OpenAI’s intellectual property, which can go in products such as Copilot. And it still has the exclusive on supplying computing requests for OpenAI’s application programming interface.
But the relationship has shown signs of strain, and Microsoft named OpenAI as a competitor in July. Microsoft CEO Satya Nadella talked about OpenAI CEO Sam Altman’s big ambitions on a podcast with investors Brad Gerstner and Bill Gurley that was released in December.
“What he wants to do, I have to accommodate for, so that he can do what he does,” Nadella said. “And he needs to accommodate for the discipline that we need on our end, given the overall constraints that we may have.”
