Microsoft is reportedly thinking about suing its partner OpenAI and Amazon. The reason? A new $50 billion deal between Amazon and OpenAI might break Microsoft’s exclusive cloud agreement with the maker of ChatGPT.
Last month, Amazon and OpenAI struck several deals. One of these made Amazon Web Services (AWS) the only outside cloud provider for Frontier, OpenAI’s platform for building and running AI agents for businesses.
The main issue is whether OpenAI can offer Frontier through AWS without violating its partnership with Microsoft. That original deal requires OpenAI’s models to run on Microsoft’s Azure cloud platform. According to the Financial Times, which cited sources, Microsoft executives believe this approach is not allowed and goes against their agreement’s spirit, if not its exact wording.
Reuters couldn’t immediately confirm the report, and Microsoft, Amazon, and OpenAI haven’t commented yet. The FT also reported that the companies are talking to try and sort out the disagreement without going to court, especially before Frontier officially launches.
A source close to Microsoft’s position told the newspaper, “We know our contract. We will sue them if they breach it. If Amazon and OpenAI want to take a bet on the creativity of their contractual lawyers, I would back us, not them.” This shows Microsoft is serious about enforcing its agreement.
Microsoft was one of the first big investors in OpenAI, putting in $1 billion in 2019 and another $10 billion in early 2023. Last September, they signed a non-binding agreement that set new terms for their relationship. This new agreement cleared the way for OpenAI to make deals with other companies like SoftBank, Nvidia, and Amazon.
In a joint statement last month, Microsoft and OpenAI tried to clarify their relationship. They stated that Microsoft still has “exclusive license and access to intellectual property across OpenAI models and products” and that Azure remains the exclusive cloud provider for OpenAI’s models. While this statement aimed to define what Amazon and OpenAI could do together without involving Azure, it also mentioned that Microsoft was “excited to see” what the two companies would build and that Frontier would continue to be hosted on Azure. This shows the complex and perhaps conflicting nature of these agreements.
