Microsoft-OpenAI alliance in trouble? FT report says tech giant ‘prepared to walk away’ from deal — what we know | Company Business News

Microsoft may halt negotiations with OpenAI due to disagreements over key issues, including the size of the Silicon Valley tech giant’s future stake in the company, according to a report by the Financial Times.

Citing sources in the know, FT reported that Microsoft “is prepared to abandon its high-stakes negotiations” with OpenAI — its artificial intelligence (AI) partner of six years — if dicussions with the ChatGPT maker remain stuck.

The two sides seem “unable to agree” on critical issues such as the size of Microsoft‘s future stake in OpenAI, and the giant plans to maintain the existing commercial contract till 2030, the FT report added.

Microsoft and OpenAI did not immediately respond queries, as per a Reuters report.

But the rumours have been swirling for some time now, and after reports on June 17, the companies in a joint statement, had dismissed any rift, stating: “We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing and we are optimistic we will continue to build together for years to come.”

Microsoft-OpenAI talks devolving? Key points

Earlier, the Wall Street Journal in a report on June 17 noted that tensions between the tech companies was “flaring” as OpenAI seeks to “loosen Microsoft’s grip on its AI products and computing resources”.

Notably, OpenAI is also seeking Microsoft’s “blessings” to convert operations into “for profit” in order to raise funds and list, the WSJ report added.

However, recent talks have been fraught with disagreements, with the sources telling WSJ that OpenAI has accused Microsoft of “anticompetitive behavior” — something that could get federal regulators involved in reviewing the terms of contract for potential violations.

Another key point of contention stems from OpenAI’s $3 billion acquisition of Windsurf. Since Microsoft has access to all of OpenAI’s IP, which uses it to build its own GitHub Copilot, the latter wants to keep Windsurf’s IP restricted.

Another argument is over how much Microsoft would own if OpenAI went public, and the demand is more than what the ChatGPT maker is willing to give, the sources told WSJ. The conversion to for-profit must be completed by 2025-end, if OpenAI wants to keep some $20 billion in funding.

The report added that the Microsoft-OpenAI partnership has been widely viewed as one of the most successful in tech history, and allowed the budding startup resources in exchange for the tech. This could now change, as both sides turn competitors, it said.

(With inputs from WSJ, Reuters)