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Denise Dresser, OpenAI’s chief revenue officer, said the AI company agreement Tuesday to make its models available on Amazon had nothing to do with the announcement a day earlier that the startup had restructured its relationship with Microsoft for the 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 part of the artificial intelligence company. As part of the deal, OpenAI agreed to purchase an additional $250 billion worth of Azure services. And a revenue-sharing agreement would remain in effect until OpenAI is verified by an independent panel as having achieved artificial general intelligence, or AGI.
One of the major developments since then is that OpenAI has moved closer to Amazon, Microsoft’s biggest rival in cloud infrastructure.
In November, OpenAI disclosed a A commitment of 38 billion dollars with Amazon Web Services. And in late February, Amazon announced it would invest $50 billion in OpenAI, which, in turn, would use 2 gigawatts of AWS’s custom Trainium chips to train AI models.
Amazon and OpenAI also agreed at the time to jointly develop “custom models” for Amazon’s engineering teams to power its consumer products, as well as OpenAI’s commitment to spending on AWS. extended of 100 billion dollars.
“That’s what happened the most,” Rishi Jaluria, an RBC Capital Markets analyst who recommends buying Microsoft shares, said in an interview.
This week’s double is the starkest sign yet that a sea change is underway in the decade-long relationship between Microsoft and OpenAI.
It all started in 2016, when OpenAI began conduct its major experiments on Azure. Three years later, Microsoft invested its first $1 billion in OpenAI, a figure that would grow to $13 billion over several follow-up cycles.
Read more CNBC tech newsBut in 2024, Microsoft started calling OpenAI is a competitor when it comes to financial disclosure, and early last year the software giant lost its designation as OpenAI’s exclusive cloud provider. In a internal note Earlier this month, Dresser wrote that the partnership between OpenAI and Microsoft was “fundamental to our success” but “also limited our ability to meet businesses where they are.”
In this context, the latest agreement between the two companies “looks quite smooth and, from what we know, could still change in six months,” UBS analysts wrote in a note on Monday.
Additional elements of the deal include the end of Microsoft’s exclusive license to OpenAI’s intellectual property and revenue sharing payments from Microsoft to OpenAI. Microsoft will also no longer be the sole cloud provider for API products built with third parties.
“Even though some changes seem inevitable, Microsoft appears to have made more concessions than gains,” write UBS analysts, who have a buy rating on Microsoft.
Amazon CEO Andy Jassy called Monday’s announcement “very interesting” in an article on X, adding that more details would be shared on Tuesday.
A few hours later, his company intervened advertise a service to create AI agents with OpenAI models.
“Original Partner”Microsoft CEO Satya Nadella, right, greets OpenAI CEO Sam Altman at the OpenAI DevDay event in San Francisco on November 6, 2023.
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For years, developers interested in these models had to go through Microsoft’s Azure cloud or work directly with OpenAI. Now, companies with significant investments in AWS will be able to adopt these models more easily, while still taking advantage of volume spending plans.
Dresser, speaking at an Amazon event, said the overhaul of OpenAI’s deal with Microsoft was not inspired by the growing collaboration with Amazon.
“Microsoft is our initial partner,” she said. “They are an incredible partner for us. They will be a premier partner as we move forward. Our goal is to make sure, when we meet our customers where they are, that they have access to the environments that they work in. And we want to make sure that we are providing the best models in the best environments for customers to be successful.”
The Financial Times reported that Microsoft had considered legal action over OpenAI’s plans with Amazon, and Microsoft told the newspaper that it was “confident that OpenAI understands and respects the importance of delivering.” [its] legal obligation.” Microsoft did not provide comment beyond Monday’s announcement.
Microsoft is also taking steps to diversify away from OpenAI.
In September, Microsoft announced that it was starting to rely on an AI model from Anthropic to answer some queries from the 365 Copilot assistant for commercial customers. Two months later, Microsoft agreed to invest up to $5 billion in Anthropic, which committed to purchasing $30 billion of Azure compute capacity.
Capitalizing on the growing popularity of Anthropic’s Claude Code, Microsoft in March announced an offering called Co-pilot Cowork in cooperation with Anthropic.
One downside of the growing demand for Claude is that reliability has suffered. The company reported partial or major outages in 37 of the last 90 days. Amazon, one of Anthropic’s early partners and investors, took notice.
Anthony Liguori, vice president of AWS, said his team, which is building the Bedrock service for working with AI models, moved to OpenAI’s Codex as its primary development platform after relying on Claude Code and Amazon’s. Kiro Tool.
The reality for all major parties involved is that they need each other.
Capacity is so limited that OpenAI and Anthropic must work with all major cloud providers to secure as much compute as possible. And Microsoft and Amazon need easy access to all major models to serve their huge customer bases.
So even though Microsoft and OpenAI are moving away from each other, Jaluria was quick to note, “Microsoft still needs OpenAI, and OpenAI still needs Microsoft.”
Correction: An earlier version of this story misspelled Dresser’s first name in key points.
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