These mounting costs have forced OpenAI to request additional investment from Microsoft, leading to difficult negotiations.Microsoft, while recognizing the value of its relationship with OpenAI, has grown increasingly wary of the financial burden.
As OpenAI’s requests for more computing power and funding continued, Microsoft began exploring other options. In March, Microsoft made a strategic move by hiring a significant portion of the staff from Inflection, a competitor to OpenAI. This signaled a shift in Microsoft’s strategy—diversifying its AI investments and hedging its bets.
Gil Luria, an analyst at D.A. Davidson, noted, “Microsoft could be left behind if it is only using OpenAI technologies. It is a real race—and OpenAI may not win it.”
OpenAI’s “AGI Achieved” Loophole: A Strategic Threat
As tensions mount, OpenAI is reportedly considering using a unique contractual clause to gain the upper hand in negotiations. Embedded within their agreement with Microsoft is a so-called “AGI achieved” loophole.
This clause specifies that if OpenAI successfully develops artificial general intelligence (AGI)—a machine with capabilities akin to the human brain—Microsoft would lose access to OpenAI’s technologies. Originally designed to prevent any potential misuse of an AGI by a corporate partner, this clause now appears to be a potential strategic weapon for OpenAI.
According to insiders, OpenAI is allegedly threatening to trigger the “AGI achieved” clause as a way to renegotiate more favorable terms, particularly around the computing prices it pays to Microsoft. With computing costs predicted to soar in the coming years, OpenAI’s leadership sees this loophole as critical leverage to escape the exclusivity of their current contract and explore more affordable alternatives. Whether this is a serious threat or a negotiation tactic remains to be seen, but it adds a new layer of complexity to the relationship between the two companies.
Internal Tensions: A Struggling Relationship
The strain between Microsoft and OpenAI has extended beyond financial matters. Internal disagreements between employees of both companies have worsened the situation. A particular source of frustration for OpenAI has been Microsoft’s hiring of Mustafa Suleyman, the former CEO of Inflection. Suleyman now leads a new group at Microsoft that focuses on developing AI technologies that could eventually replace those provided by OpenAI.
According to insiders, tensions boiled over during a recent video call when Suleyman reportedly yelled at an OpenAI employee for not delivering technology quickly enough. There have also been complaints about Microsoft engineers downloading OpenAI software without adhering to agreed-upon protocols, further exacerbating the friction.
These incidents have raised concerns within OpenAI that Microsoft may not be fully committed to supporting their mutual goals, instead focusing on its long-term strategy of developing alternative AI solutions.
