Microsoft Announces Changes to OpenAI’s Azure Exclusivity on New Cloud Capacity

Microsoft’s multi-year partnership with OpenAI is taking a new direction as the ChatGPT maker will no longer exclusively choose Microsoft Azure for new cloud capacity. While OpenAI will continue using Azure to run and train its products, the company will be free to use other cloud providers if Microsoft refuses to sell additional Azure capacity.

“OpenAI recently made a new, large Azure commitment that will continue to support all OpenAI products as well as training,” Microsoft announced yesterday. “This new agreement also includes changes to the exclusivity on new capacity, moving to a model where Microsoft has a right of first refusal (ROFR). To further support OpenAI, Microsoft has approved OpenAI’s ability to build additional capacity, primarily for research and training of models.”

Microsoft clarified that the key aspects of its partnership with OpenAI aren’t changing: Microsoft can still use OpenAI models in its products, and the OpenAI API will continue to run exclusively on Azure. Additionally, Microsoft will continue to offer access to OpenAI models through its Azure OpenAI Service, and the existing revenue-sharing agreements between the two companies remain in place.

Back in October, a report from the New York Times detailed how OpenAI had been trying to reduce its costs and find other cloud partners than Microsoft to support its development. The publication also revealed that Microsoft allowed the ChatGPT maker to sign a “roughly $10 billion” cloud computing deal with Oracle and agreed to reduce how much it charged OpenAI for computing power.

Microsoft announcing it’s no longer OpenAI’s exclusive cloud provider comes right alongside OpenAI’s Stargate Project announcement. As part of this new joint venture, OpenAI, SoftBank, Oracle, and MGX plan to “invest $500 billion over the next four years building new AI infrastructure for OpenAI in the United States.” OpenAI said Project Stargate will be investing $100 billion into this new AI infrastructure “immediately,” and the company also announced Arm, Microsoft, NVIDIA, and Oracle as “key initial technology partners.”