The tech bromance between Microsoft and OpenAI appears to be over. The once-tight bond between the two companies has been fraying for over a year and is getting worse. OpenAI CEO Sam Altman had previously described their relationship as “the best bromance in tech.” However, as with many romances, times change and relationships sour.
For at least six months, the two companies have been sniping at each other, with periods of open warfare. Altman attempted to convince over 300 corporate executives worldwide to switch their AI allegiance from Microsoft to OpenAI, suggesting they would be better off working directly with the creators of generative AI technology rather than through Microsoft’s Copilot. Microsoft CEO Satya Nadella responded by downplaying OpenAI’s importance, stating that if OpenAI disappeared, Microsoft would still have all the necessary IP rights, capability, people, compute, and data.
The dispute centers on what Microsoft will get in return for its $13 billion investment in OpenAI and the long-term structure of their relationship. The confusion stems from OpenAI’s origins as a nonprofit founded in 2015 by Altman, Elon Musk, and others, with the goal of ensuring AI benefits humanity. However, as the potential for AI profits emerged, the company transformed into a “capped” for-profit entity with a complex corporate structure.
Microsoft invested in OpenAI and gained exclusive rights to use its technologies to build Copilot AI tools. However, the terms of this agreement have become contentious as OpenAI plans to go public through an IPO, valued at $300 billion. Microsoft is now more interested in securing long-term access to OpenAI’s technologies to maintain its AI lead rather than seeking a significant cash infusion from the IPO.
“Microsoft’s interests go beyond equity — it’s about return on investment, sustained AI infrastructure growth, and maintaining Copilot’s edge by anchoring it on OpenAI models,” said Neil Shah, vice president for research at Counterpoint Research. “Microsoft would like to continue having a big slice of it, being one of the key initial supporters and investors.”
OpenAI’s goals are less clear, as it claims to pursue both ethical AI development and maximum profit. The company’s reorganization for an IPO may face regulatory challenges, making a friendly deal with Microsoft crucial for approval. This likely means Microsoft will get what it wants: long-term access to OpenAI’s valuable technologies, solidifying its position as the world’s most valuable AI company.
