Microsoft Corporation (NASDAQ:MSFT) shares surged 4% on Tuesday morning after the tech giant announced a new definitive agreement with OpenAI, valuing its stake in the artificial intelligence firm at approximately $135 billion.
Partnership redefined
The renewed deal strengthens the long-standing partnership that began in 2019, with Microsoft now holding around 27% ownership in OpenAI Group PBC on an as-converted diluted basis. This makes Microsoft one of OpenAI’s largest stakeholders across its employee, investor, and foundation ownership groups.
Under the new structure, Microsoft will retain its position as OpenAI’s exclusive frontier model partner with extended intellectual property (IP) rights through 2032. These rights will now include access to future AI models developed after Artificial General Intelligence (AGI) is achieved, ensuring Microsoft remains deeply integrated into OpenAI’s research and development roadmap.
Key changes in agreement
The updated agreement introduces multiple provisions, including:
- AGI verification by an independent expert panel before formal declaration.
- Extension of IP rights for Microsoft to post-AGI models.
- Commitment from OpenAI to purchase an additional $250 billion worth of Azure cloud services over the coming years.
- Removal of Microsoft’s first-refusal rights as OpenAI’s compute provider, giving both parties more operational flexibility.
The restructured deal also enables OpenAI to collaborate with third parties and offer API access to U.S. national security clients, irrespective of their cloud provider. Meanwhile, Microsoft gains the freedom to pursue AGI development independently or with new partners, further diversifying its AI ambitions.
Strategic outlook
The latest partnership evolution follows months of negotiation and reflects the two companies’ commitment to balancing innovation, safety, and independence in AI development. With Microsoft continuing to dominate AI infrastructure through Azure and its integration of OpenAI’s models into products like Copilot, Office 365, and GitHub, the expanded partnership reinforces its leadership in the global AI race.
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