In May, OpenAI faced significant scrutiny and external pressure, prompting the company to revise its plans to transition fully into a for-profit structure. Responding to regulators and critics, OpenAI opted for a hybrid model where a nonprofit board retains oversight while its for-profit subsidiary is transformed into a public benefit corporation (PBC).
What Changed in the Agreement
The new agreement marks a significant shift in the partnership between OpenAI and Microsoft, extending the tech giant’s intellectual property rights concerning OpenAI’s innovations through 2032. Under this revised arrangement, Microsoft gains rights to OpenAI’s model weights, architecture, inference code, and fine-tuning code until an expert panel verifies the arrival of Artificial General Intelligence (AGI) or through 2030, whichever comes first.
Importantly, the latest agreement stipulates that OpenAI is now permitted to release open-weight models, such as gpt-oss, provided they meet specified capability standards. However, Microsoft’s rights on OpenAI’s research methods—which encompass proprietary techniques used in model development—will diminish and expire under the same terms. Moreover, the agreement clearly states that Microsoft will not hold rights over any consumer hardware produced by OpenAI.
Another notable change is the ability for OpenAI to collaborate with third-party firms on certain projects. While API products must still operate exclusively on Microsoft’s Azure cloud, non-API offerings will have more flexibility in utilizing other cloud services. This adjustment allows OpenAI to pursue partnerships across the tech landscape while maintaining Azure as its primary infrastructure provider.
Implications for AGI Development and Partnership Dynamics
Under the new terms, Microsoft is empowered to independently pursue AGI development, whether in collaboration with other firms or autonomously. Should Microsoft leverage OpenAI’s intellectual property to develop AGI prior to the expert panel’s confirmation, those models must significantly surpass current leading AI models’ compute requirements for training.
The revenue-sharing framework between OpenAI and Microsoft will also persist until the expert panel verifies the attainment of AGI, although payments will now extend over a longer timeline. Furthermore, OpenAI has committed to purchasing $250 billion in Azure services. However, Microsoft no longer holds the right of first refusal, allowing OpenAI the freedom to explore alternative cloud providers if necessary. Nevertheless, the substantial Azure commitment indicates that it will likely continue to serve as OpenAI’s primary compute partner.
This revised agreement paints a new landscape for OpenAI and Microsoft, highlighting a collaborative yet competitive dynamic in the pursuit of groundbreaking artificial intelligence technologies. The conditions established in this ongoing partnership are indicative of both companies’ commitment to responsible AI development, with an emphasis on balancing innovation and ethical considerations.
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Image Credit: arstechnica.com
