OpenAI to Reduce Microsoft Revenue Share by 2030

OpenAI's Projected Revenue Sharing with Microsoft

According to reports from The Information, OpenAI anticipates a reduced revenue share arrangement with Microsoft by the year 2030, compared to the current agreement.

Restructuring Plans and Revenue Models

This development follows OpenAI’s recent shift in restructuring strategies. The company is now pursuing a plan where its for-profit entity will operate as a public benefit corporation (PBC).

However, control will remain with its existing nonprofit parent organization.

Current and Future Revenue Splits

Currently, OpenAI’s agreement stipulates sharing 20% of its total revenue with Microsoft.

The AI firm has communicated to investors its expectation of decreasing this share to 10% by 2030, encompassing all business partners, including Microsoft, as reported by The Information.

Microsoft's Investment and Contractual Rights

Microsoft has made substantial investments, amounting to tens of billions of dollars, in OpenAI.

Their existing contract, valid until 2030, outlines revenue sharing obligations for both parties.

Furthermore, the agreement grants Microsoft specific rights regarding OpenAI’s intellectual property (IP) within its own AI products.

Exclusive access to OpenAI’s APIs on the Azure platform is also included in the terms.

Concerns and Approval Process

Bloomberg reported on Monday that Microsoft has not yet given its approval to OpenAI’s proposed corporate restructuring.

The tech giant is reportedly seeking assurances that the new structure will safeguard its significant financial investment.

Lack of Immediate Response

Requests for comment directed to both OpenAI and Microsoft have not yet received a response.