This article first appeared on GuruFocus.
Microsoft (NASDAQ:MSFT) fell 0.20% intraday trading after reports that the company will no longer hold exclusive access to OpenAI’s AI models and products, clearing the way for OpenAI to sell across rival cloud platforms including Amazon (NASDAQ:AMZN) and Alphabet’s Google (NASDAQ:GOOG). Alphabet shares rose 2.10% on the news while Amazon slipped 0.40%. Under the deal, Microsoft retains a license to OpenAI’s intellectual property through 2032 and remains its primary cloud partner, but will no longer pay a revenue share for OpenAI products sold on its cloud. The revenue OpenAI must share with Microsoft through 2030 now carries a cap and is no longer tied to technology milestones, including whether OpenAI achieves artificial general intelligence.
The change follows months of rising tensions. The Financial Times reported last month that Microsoft was weighing legal action over OpenAI’s $50 billion cloud deal with Amazon, which may have breached the exclusive arrangement. An internal OpenAI memo reported by CNBC described demand since launching on Amazon’s cloud as “staggering,” and acknowledged the Microsoft partnership had limited its enterprise reach.
Ending the exclusivity pact may also help Microsoft fight antitrust scrutiny in the US, UK, and Europe over whether its OpenAI tie-up gave it an unfair advantage in cloud and enterprise AI markets. For OpenAI, the commercial logic is straightforward. Gil Luria, analyst at D.A. Davidson, said AWS and Google Cloud enterprise customers had been constrained in their ability to integrate OpenAI products and will now be more likely to consider OpenAI alongside Anthropic, widening the competitive pressure on one of OpenAI’s closest rivals in the enterprise market.
