OpenAI drift from Microsoft to Amazon turns aggressive after subtlety

OpenAI revenue chief Denise Dresser said the AI company’s agreement on Tuesday to make its models available on Amazon had nothing to do with an announcement a day earlier that the startup had restructured its relationship with Microsoft for a second time in six months.

“The two are not related in any way,” Dresser told CNBC in an interview following OpenAI’s announcement with Amazon.

Analysts aren’t so sure.

A lot has happened since late October, when OpenAI completed its recapitalization, giving Microsoft a 27% stake in the for-profit side of the artificial intelligence company. As part of that arrangement, OpenAI agreed to purchase an incremental $250 billion of Azure services. And a revenue share agreement would remain until OpenAI was verified by an independent panel to have reached artificial general intelligence, or AGI.

One major development since then is that OpenAI has been cozying up to Amazon, Microsoft’s biggest rival in cloud infrastructure.

In November, OpenAI disclosed a $38 billion commitment with Amazon Web Services. And in late February, Amazon said it would invest $50 billion in OpenAI, which would, in turn, use 2 gigawatts worth of AWS’ custom Trainium chips for training AI models.

Amazon and OpenAI also agreed at the time to jointly develop “customized models” for Amazon’s engineering teams to power its consumer products, and OpenAI’s spending commitment on AWS expanded to $100 billion.

“That was the big thing that was happening,” said RBC Capital Markets analyst Rishi Jaluria, who recommends buying Microsoft shares, in an interview.

This week’s one-two punch is the starkest sign yet that a dramatic shift is underway in the decade-long relationship between Microsoft and OpenAI.

It started in 2016, when OpenAI began running its big experiments on Azure. Three years later, Microsoft invested its first $1 billion in OpenAI, a number that would grow to $13 billion over several follow-on rounds.

But in 2024, Microsoft started calling OpenAI a competitor in its financial disclosures, and early last year the software giant lost its designation as OpenAI’s exclusive cloud provider. In an internal memo earlier this month, Dresser wrote that OpenAI’s partnership with Microsoft has been “foundational to our success,” but “has also limited our ability to meet enterprises where they are.” 

With that backdrop, the latest agreement between the two companies, “is looking to be quite fluid and for all we know could change again in six months,” UBS analysts wrote in a note Monday.

Additional elements of the deal include an end to Microsoft’s exclusive license to OpenAI’s intellectual property and to Microsoft’s revenue share payments to OpenAI. Microsoft will also no longer be the sole cloud provider for API products built with third parties.

“While some changes seem inevitable, Microsoft appears to have made more concessions than gains,” wrote the UBS analysts, who have a buy rating on Microsoft….