Microsoft, OpenAI’s new deal: Inside the rift of Silicon Valley’s two big names

In a deal that’s reshaping the tech landscape, Microsoft and OpenAI have reached a new agreement allowing the ChatGPT-maker to restructure into a public benefit corporation, a move valuing OpenAI at a jaw-dropping $500 billion.

The deal gives the AI giant more autonomy, ending several of Microsoft’s controlling rights, yet keeping the two giants tied together through an extended cloud contract until at least 2032.

For Microsoft, the investment has been golden; its $13.8 billion bet on OpenAI has reportedly multiplied tenfold.

But beneath the surface, the alliance between the world’s most influential software company and the most talked-about AI lab has been anything but smooth sailing.

A look at the past

When Microsoft first invested in OpenAI in 2019, it wasn’t just about partnership; it was about dominance.

Microsoft secured exclusive rights to use OpenAI’s technology, powering everything from Bing AI to Copilot. But as ChatGPT went viral, tensions began to brew.

Sam Altman, OpenAI’s CEO, reportedly pushed Microsoft for greater independence and more computing power to fuel the company’s audacious goal of achieving artificial general intelligence (AGI).

Too much power, too many demands

Behind closed doors, Microsoft’s top brass grew uneasy. CFO Amy Hood reportedly warned that building billion-dollar AI servers for OpenAI might never pay off.

The AI company, meanwhile, continues to burn through billions and may not turn a profit until 2029.

As OpenAI’s appetite for power grew, it began sourcing computing capacity from rivals like Oracle, Google, and even Nvidia, despite Microsoft’s exclusivity clause.

Each deal, from the $22 billion tie-up with CoreWeave to Nvidia’s $100 billion investment, marked another crack in the alliance.

Friends or rivals?

This latest restructuring gives OpenAI room to breathe, but also signals a subtle relief from Microsoft’s grip.

While they remain business partners, both companies are clearly charting their own AI futures.