Microsoft and OpenAI End Exclusivity Deal, Opening Door to AWS and Google Cloud

Quick Facts

• Microsoft retains 27% stake in OpenAI and non-exclusive IP license through 2032 despite ending cloud exclusivity
• OpenAI continues paying Microsoft 20% revenue share through 2030 but can now sell directly on AWS and Google Cloud
• Amazon invested $50 billion in OpenAI in February and becomes exclusive third-party cloud provider for OpenAI Frontier platform

Microsoft and OpenAI dismantled their exclusive cloud partnership on Monday, freeing OpenAI to sell AI models directly through Amazon Web Services and Google Cloud for the first time since their collaboration began in 2019.

The restructured deal preserves Microsoft’s financial stake while ending the cloud exclusivity that made it the sole distributor of OpenAI’s models to enterprise customers. Microsoft keeps its 27% equity position in OpenAI, valued at $135 billion, and retains a non-exclusive license to OpenAI’s intellectual property through 2032.

OpenAI will continue paying Microsoft a 20% revenue share through 2030, including cuts from ChatGPT subscriptions. But Microsoft will no longer receive revenue shares when customers access OpenAI models through Azure under the new terms.

The change stems from OpenAI’s $50 billion partnership with Amazon announced in February. AWS becomes the exclusive third-party cloud distribution provider for OpenAI’s enterprise platform Frontier, which launched earlier this month.

“The Microsoft partnership had limited our ability to meet enterprises where they are, especially for customers using AWS Bedrock,” OpenAI revenue chief Denise Dresser wrote in an internal memo. She described inbound demand for the AWS offering as “frankly staggering.”

Amazon CEO Andy Jassy said OpenAI models will be available on Bedrock “in the coming weeks.” The company plans to reveal more details at a San Francisco event Tuesday.

Microsoft shares fell 3% on the news while Amazon and Alphabet gained slightly. The market reaction reflects expectations that AI infrastructure will no longer revolve around a single dominant platform.

“The new deal with Microsoft was essential for OpenAI to be successful in the enterprise market,” said Gil Luria, analyst at D.A. Davidson & Co. “AWS and Google Cloud enterprise customers have been limited in their ability to integrate OpenAI’s products because of the exclusive relationship.”

The restructuring may help Microsoft address antitrust scrutiny in the UK, US and Europe over whether its OpenAI partnership created unfair advantages in cloud and enterprise AI markets. It also resolves legal tensions that arose when OpenAI signed its Amazon deal, which Microsoft had considered challenging in court.

Microsoft reported $7.5 billion in OpenAI-related revenue last quarter, demonstrating the financial scale of their relationship even in its loosened form. The company has invested more than $13 billion in OpenAI since 2019.

Read more: Microsoft and OpenAI gut their exclusive deal, freeing OpenAI to sell on AWS and Google Cloud