As OpenAI is on the way to restructuring itself, giving rise to a for-profit unit, it faces an indelible challenge from Microsoft, its long-term investor. The agreement between the companies, which will last till 20230, is the bone of contention this time. The landscape looks tense. OpenAI has even considered reporting Microsoft to antitrust regulators over alleged anticompetitive behavior, even as Microsoft threatens to exit the talks entirely—a move that could derail OpenAI’s fundraising plans, a WSJ report claimed. 

The partnership between the companies enables Microsoft to have a long list of IPs, a big cut of its revenue, and the right of first refusal on any alternative cloud provider. Simply, Microsoft has earned it by the company with $13 billion since 2019. As of public announcements, Microsoft has told Business Insider (BI) in a joint statement with OpenAI that their talks are "ongoing" and that both sides are "optimistic we will continue to build together for years to come."

To know why OpenAI needs the restructuring and a for-profit unit, click here. 

What's OpenAI Pushing For? 

Under the existing agreement between the companies, Microsoft gets around a 20 percent cut, up to $92 billion from OpenAI’s revenue stock. However, OpenAI wants to reduce it and, in return, offers more equity to Microsoft. The core issue is the ownership stake that could give Microsoft greater leverage over its partner. Ongoing discussions suggest a figure between 20% and 40%, according to an ET report.

In pursuit of calculating the ground impact, it's worth noting that shareholders of public companies like Microsoft tend to care more about revenue than stakes in highly unprofitable AI startups. This might prove seriously detrimental for OpenAI’s case. 

What else does Microsoft want? 

To believe the reports, the AGI clause is still an issue of friction between the companies. The AI company takes AGI, AI state that would potentially match or surpass human capabilities, so seriously that the contract states a complete stoppage of the 20 percent cut to Microsoft as the company reaches this stage. 

To read more about AGI plans, click here 

In understanding, the definition itself is so vague that the concept seems slippery and tricky. It’s this itself that Microsoft wants the clause to be removed in return for signing the restructuring plans. The companies have even defined it as OpenAI’s ability to generate $100 billion in profits; however, the company seems hugely unprofitable, as per the documents reviewed by the NYT.

Other Tensions 

It includes the WindSurf, Microsoft Copilot’s competitor, an issue wherein Microsoft is traditionally set to benefit from its potential acquisition, as it would get Microsoft access to its competitor’s API. But in this case, neither Windsurf nor OpenAI wants the same. 

This poses a serious risk for Microsoft, as it won't be able to gain access to any IPs further acquired by OpenAI. It's something that OpenAI has never been shy about.