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OpenAI said to cap Microsoft revenue sharing at $38b
OpenAI’s revenue sharing payments to Microsoft are capped at US$38 billion, according to The Information reported on May 11.
Reuters said it could not immediately verify the report.
Microsoft sought a US$92 billion return on its early OpenAI investments, according to 2023 planning documents disclosed in federal court in Oakland, California.
Microsoft invested about US$13 billion in OpenAI through early 2023 and later received a 27% stake in the AI company as part of its restructuring.
🔗 Source: Reuters
🧠 Food for thought
Implications, context, and why it matters.
The US$38 billion figure limits payments
- The limit sits within a revenue-sharing deal where OpenAI pays Microsoft 20% of its revenue 1.
- Those payments run through 2030. They come from a partnership that began with Microsoft investing more than US$13 billion in OpenAI starting in 2019 2.
- The terms also became one-way. Microsoft no longer sends a revenue share to OpenAI when customers buy access to OpenAI models through Azure, Microsoft’s cloud computing platform 3.
The new terms give OpenAI more room in the cloud market
- The renegotiation ended Microsoft’s exclusive right to distribute OpenAI models. OpenAI can now offer its products across cloud providers 4.
- The earlier setup held back sales to companies on other clouds, wrote Denise Dresser in an internal memo. Dresser is OpenAI’s CRO 1.
- The shift came after OpenAI reached a deal with Amazon for up to US$50 billion. It also expanded its existing US$38 billion Amazon Web Services (AWS) agreement by US$100 billion over the next eight years 2.
Recent OpenAI developments
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