Global DeskMicrosoft’s stock jumped 3% on Tuesday morning after the company announced a new revised deal with OpenAI. The new deal values Microsoft’s stake in OpenAI at about $135 billion, GuruFocus reported. Microsoft will now own 27% of OpenAI on an as-converted diluted basis after the recapitalization. Earlier, it held about 32.5%, excluding recent funding rounds. Under the agreement, Microsoft keeps exclusive rights to OpenAI’s API on Azure, and certain intellectual property (IP) protections until 2032. However, Microsoft’s IP rights do not include OpenAI’s consumer hardware, which OpenAI is developing with designer Jony Ive, Yahoo Finance said.
Microsoft and OpenAI strengthen Azure partnershipMicrosoft also ge up its previous right of first refusal to provide some OpenAI compute services. The deal sets new commercial rules — OpenAI will use a lot more Azure cloud services, and API products sold to others will stay Azure-exclusive. Non-API products, like other software or tools, can now run on any cloud provider, not just Microsoft Azure. Microsoft said this new setup helps it keep doing advanced AI research — including independent work on AGI (Artificial General Intelligence) — while still cooperating with OpenAI and other partners. The agreement also allows OpenAI to move forward with its plan to become a for-profit public benefit corporation (PBC).Microsoft’s AI rights and AGI research plansUnder this new structure, Microsoft will hold 27% of OpenAI Group PBC, valued at $135 billion, while OpenAI’s nonprofit arm will hold about $130 billion of the for-profit side. Microsoft will no longer he the automatic right to serve as OpenAI’s exclusive cloud provider. Still, OpenAI has committed to buying $250 billion worth of Azure services, showing that their cloud partnership remains very strong.
Live EventsThe duration of Microsoft’s IP rights over OpenAI’s models and products now lasts through 2032, even for models made after OpenAI reaches AGI, Yahoo Finance said. When OpenAI claims it has reached AGI (AI that can think like a human), a third-party expert panel must verify it. Microsoft will lose access to OpenAI’s research either when AGI is confirmed or by 2030, whichever happens first. At that point, their revenue-sharing deal will also end. The new agreement allows OpenAI to build products with other companies, but API products remain exclusive to Azure, while non-API ones can use any cloud vendor. Microsoft is also now allowed to work on its own AGI, but if it reaches AGI using OpenAI technology before OpenAI does, its computing power will be limited.Microsoft had been one of the main holdouts to OpenAI’s for-profit plan, but this deal finally clears the way for that plan to move forward. Both Microsoft and OpenAI he benefited hugely from their partnership — OpenAI spends billions on Microsoft’s Azure, while Microsoft’s investments he boosted OpenAI’s growth. Their partnership has made them leaders in the AI race, staying ahead of Amazon and Google, as per the report by Yahoo Finance. OpenAI, meanwhile, is planning a big expansion with its “Stargate Project” — a plan to build huge data centers across the U.S. using Oracle’s cloud services.
FAQsQ1. Why did Microsoft’s stock go up today?Microsoft’s stock rose about 3% after it announced a new $135 billion deal with OpenAI, giving it a 27% stake and expanding their Azure cloud partnership.
Q2. What is the new agreement between Microsoft and OpenAI?
The new deal updates Microsoft’s ownership, extends IP rights till 2032, and lets OpenAI move ahead with its for-profit public benefit plan while using more Azure services.
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