OpenAI and Microsoft’s alliance fractures as cloud exclusivity deal ends — Azure’s single-provider monopoly for ChatGPT is officially over

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OpenAI and Microsoft's alliance fractures as cloud exclusivity deal ends — Azure's single-provider monopoly for ChatGPT is officially over

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What this means for the ever-nebulous AGI clause that both companies were so keen to retain access to and control over, if and when it materializes, remains to be seen. It's an intriguing move that leaves the immediate future of both companies' AI efforts uncertain, but perhaps it's better than Microsoft's legal department firing all barrels at OpenAI over its recent deal with Amazon .

One of the biggest questions of the AI industry over the past year and a half has been the source of profit. Not the infrastructure investment, or the circular deals and token IOUs, but the real profit. For the investors who pumped tens of billions of dollars into OpenAI, Anthropic, and xAI, and for the shareholders who ballooned Microsoft, Google , and Meta's stock prices off the back of these mega deals and unprecedented investment plans.

You may like Microsoft and OpenAI end exclusivity agreement, opening up potential partnerships with Amazon and Google Microsoft considering suing OpenAI over Altman's recent deal with Amazon, report claims Amazon invests $50 billion in OpenAI, comitting to 2 gigawatts of Trainium silicon Microsoft CEO Satya Nadella hinted at this in January, when he said at the World Economic Forum that AI companies needed to find a clear use for the technology or risk losing the "social permission" to continue the work.

That seems to be more of a pressing issue for Microsoft by April, when it announced that Copilot use on GitHub would move to token-based billing — that is, charging users for the amount of tokens they use, rather than on a per-request basis. No longer would shorter requests with shorter responses cost as much as longer, more in-depth queries. From June, this will result in users paying more when Copilot is verbose in its responses, or when it has to analyze more data before making its suggestions.

Microsoft is already doing that with Azure agents , and it's also set to raise the price of Microsoft 365 with its Copilot integration by several dollars a month for most tiers.

According to internal documents reportedly shared with journalist Ed Zitron , this move came because Microsoft had faced a more-than-doubling of its Copilot-related costs from January this year. He also claims Microsoft will take further steps to tighten controls and increase earnings from individual AI users, including reducing rate limits and forcing users onto different models, which could more than double costs.

Things aren't much better at OpenAI, either. It was projected in January to be on track to run out of money entirely by the end of 2027 , and despite announcements of enormous investments in the company, it's projected to burn through tens of billions over the coming years. All while somehow planning to turn a profit by the end of the decade, but to manage that, it would need to earn hundreds of billions of dollars a year. OpenAI's annualized revenue run rate is reportedly sitting at roughly $2 billion per month , or $24 billion a year.

OpenAI also performed several major pivots and navigational shifts in recent months. We learned about its chip manufacturing ambitions in February , it announced it was building a GitHub competitor in March , the company warned that it would shutter the Sora text-to-video generation tool in April, and it bought a podcast for over $100 million that same month.

Even OpenAI's own financial officer has said she doesn't see how OpenAI can afford its own promised infrastructure spending, as it misses key revenue targets in 2026, according to a new WSJ report .

Market slumps as OpenAI reportedly misses internal targets for active users and revenue

OpenAI couldn’t finance its data centers, so it took control of the hardware instead

Nvidia's plan to invest $100 billion in OpenAI appears unlikely

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Related posts:

  1. OpenAI and Microsoft’s alliance fractures as cloud exclusivity deal ends — Azure’s single-provider monopoly for ChatGPT is officially over
  2. OpenAI couldn’t finance its data centers, so it took control of the hardware instead — company’s chip design aspirations lag behind Google and Amazon
  3. OpenAI couldn’t finance its data centers, so it took control of the hardware instead — company’s chip design aspirations lag behind Google and Amazon
  4. OpenAI couldn’t finance its data centers, so it took control of the hardware instead — company’s chip design aspirations lag behind Google and Amazon

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