Microsoft Expands Its $135 Billion OpenAI Partnership

Since 2019, the Microsoft OpenAI partnership has been one of the most influential collaborations in artificial intelligence. What began as an investment in a research organization has evolved into a global alliance focused on advancing AI responsibly and making its benefits widely accessible.

Now, Microsoft and OpenAI have entered a new phase of their partnership through a definitive long-term agreement. This new deal strengthens their shared foundation and sets the stage for continued growth and innovation across the AI industry.

Microsoft’s $135 Billion Investment Strengthens the Partnership

Under the new agreement, Microsoft is supporting OpenAI’s transition into a public benefit corporation (PBC) through a recapitalization process. Following this move, Microsoft’s investment in OpenAI Group PBC is valued at around $135 billion, representing about 27% ownership on an as-converted diluted basis.

Previously, before OpenAI’s recent funding rounds, Microsoft held roughly 32.5% in the for-profit entity. This strategic investment highlights Microsoft’s commitment to the OpenAI ecosystem and its long-term role in shaping AI innovation.

The new partnership structure maintains Microsoft’s exclusive IP rights and Azure API access until the development of Artificial General Intelligence (AGI). This ensures that both companies continue working closely while preparing for the future of advanced AI.

Evolving Terms for Innovation and Independence

The Microsoft OpenAI partnership now includes several refinements that balance collaboration with flexibility. OpenAI’s future declaration of AGI will be verified by an independent expert panel to ensure transparency.

Microsoft’s intellectual property rights have been extended through 2032, now covering models and products developed post-AGI while maintaining strong safety protocols. The company will retain its research IP rights until 2030 or until AGI is confirmed.

However, these rights exclude certain areas, such as model architecture, model weights, inference code, and data center software. Additionally, Microsoft’s IP rights no longer apply to OpenAI’s consumer hardware, giving OpenAI greater creative freedom.

New Flexibility and Joint Development Opportunities

The updated agreement introduces a more open framework for innovation. OpenAI can now collaborate with third parties to create new products. API-based solutions developed through these collaborations will remain exclusive to Microsoft Azure. Non-API products can run on other cloud providers.

At the same time, Microsoft now has the right to pursue AGI independently or in partnership with other organizations. If Microsoft uses OpenAI’s IP to develop AGI before it is formally declared, those models will be subject to specific compute thresholds. Although these limits are much higher than today’s systems.

The revenue-sharing structure between both companies will continue until AGI is officially verified, with payments distributed over a longer timeline.

Expanding Cloud and Government Partnerships

OpenAI has agreed to purchase an additional $250 billion in Azure services, further reinforcing Microsoft’s cloud ecosystem as the foundation for AI research and deployment. However, Microsoft will no longer hold the right of first refusal as OpenAI’s exclusive compute provider.

OpenAI will also now be able to offer API access to U.S. government national security customers, regardless of the cloud infrastructure they use. Moreover, the company is now authorized to release open-weight models that meet strict safety and capability requirements. This is an important step toward transparency and open research.

A Stronger Microsoft OpenAI Partnership for the Future

This new phase marks a significant milestone in the Microsoft OpenAI partnership, symbolizing how two of the most innovative forces in technology are preparing for the next evolution of AI.

By expanding their collaboration and redefining IP rights, both companies are ensuring that future AI development remains safe, scalable, and accessible. Microsoft and OpenAI continue to share the same mission: to make artificial intelligence a positive force that empowers individuals, organizations, and entire industries around the world.

As they enter this next chapter, their partnership stands as a model for how responsible AI innovation should look; balancing collaboration, independence, and long-term impact.