OpenAI breaks free of Microsoft's cloud

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Axios

OpenAI's revised Microsoft pact lets it sell AI models across multiple clouds, enabling a likely expansion with Amazon and broader enterprise distribution.Why it matters: The shift ends OpenAI's effective cloud exclusivity, widening its reach to customers using AWS, Google Cloud or others — and intensifying AI platform competition.Driving the news: A rewritten deal frees OpenAI to sell through any cloud, caps Microsoft's cut of OpenAI revenue and scraps a controversial provision that would have changed the companies' business relationship once artificial general intelligence (AGI) was achieved.Zoom in: Amazon and OpenAI are poised to quickly capitalize on the change.We're excited to make OpenAI's models available directly to customers on Bedrock in the coming weeks, Amazon CEO Andy Jassy said on X on Monday, promising more details at a San Francisco event AWS is hosting on Tuesday.The companies had previously discussed working together, but earlier plans focused on building a new AI system outside OpenAI's then-exclusive Microsoft deal.Zoom out: The revised pact comes amid a fast-moving AI landscape that already looks significantly different than it did in October, when the prior round of changes to the Microsoft-Open AI relationship was announced.OpenAI is increasingly focused on securing business revenue, a task that can be made significantly easier if it can offer its services via whichever cloud its potential customers are already using.Between the lines: Each company gets some things it wants out of the revamped pact.The revised deal kills the AGI trigger — a clause that hinged Microsoft's IP rights on OpenAI declaring it had achieved AGI, which both companies found too vague.Microsoft now holds non-exclusive rights to OpenAI's IP (excluding research) through 2032, leaving OpenAI free to license to others.What Microsoft getsMicrosoft no longer has to share revenue with OpenAI that it gets from serving its models via Azure.It continues to get 20 of OpenAI revenue until 2030, though that is now subject to a cap that the companies did not publicly disclose.And OpenAI still has to ship its models first for Azure, per the revised terms.Microsoft also gets intellectual property rights to OpenAI's products (but not its research) through 2032.What OpenAI getsThe ability to offer its models via any cloud is the big thing, opening up the possibility of a deal with Google Cloud, in addition to the expanded tie-up with AWS.Google is taking a close look at the revised deal terms to see what might be possible, according to a source familiar with the situation.In addition to the revenue opportunity that those clouds open up, the change could ease investor concerns ahead of the company's expected IPO later this year.Microsoft's IP rights are no longer exclusive, so OpenAI could also make pacts with others.