Microsoft, OpenAI end exclusive model deal

Microsoft and OpenAI said on April 27 that they ended Microsoft’s exclusive right to sell OpenAI’s models, allowing the ChatGPT maker to offer them through other cloud providers such as Amazon Web Services.

In return, Microsoft will stop paying a revenue share on OpenAI products it resells on Azure, while OpenAI’s own revenue share will be capped under the revised agreement.

Microsoft will remain OpenAI’s primary cloud provider and new OpenAI products will still launch first on Azure, as OpenAI expands its cloud partnerships to meet rising computing demand.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

Amazon deal came before the Microsoft and OpenAI reset

Amazon invested $50 billion in OpenAI, while OpenAI also expanded its cloud agreement with Amazon Web Services (AWS), Amazon’s cloud computing division, by $100 billion over eight years 1.
The arrangement gave AWS exclusive third-party distribution rights for OpenAI’s enterprise platform, Frontier, a system OpenAI says helps organizations build, deploy, and manage groups of AI agents that can carry out tasks with limited human input 2.
Microsoft’s revised terms keep Azure as OpenAI’s main cloud platform, with OpenAI products still launching there first, though OpenAI can now sell all of its products through other cloud providers including AWS 1.

OpenAI’s wider cloud reach adds to software market fears

Ending exclusivity gives OpenAI more room to offer its models and services through other cloud providers, deepening investor worries that AI labs could disrupt parts of the enterprise software market 3.
Some investors call that risk the “software as a service (SaaS)-pocalypse,” a theory that makers of foundational AI models could eat into software sold to businesses on a subscription basis 3.
Those worries have weighed on software stocks. Salesforce and ServiceNow are both down 31% year to date as investors assess the threat 3.