Microsoft CEO Satya Nadella was asked a direct question by Wall Street analysts on Wednesday about how the revised OpenAI partnership will affect Microsoft’s finances.
He said the new agreement was good for everyone. “We are happy with our partnership with OpenAI. My focus in any partnership is always to make sure it’s a win-win situation. That’s how we continue to be a good partner.”
He emphasized that while Microsoft retains access to OpenAI’s intellectual property, including models and agent products, it no longer has to pay OpenAI for them.
Referring to OpenAI’s royalty-free access to cutting-edge AI through 2032, Nadella said, “We have a Frontier model with all the intellectual property rights that we have access to until 2032, and we have full plans to leverage that.”
The new deal, which gives Microsoft exclusive access to OpenAI’s technology, has certainly sparked speculation that the software giant will lose its edge in the AI space. OpenAI quickly announced an exclusive AI product with Amazon, Microsoft’s biggest cloud rival (Sam Altman and AWS CEO Mark Garman give an interview about the partnership between the two companies).
But Nadella dismissed such concerns. When Microsoft reported its last full quarter of revenue under the previous agreement on Wednesday, the company reported an annual revenue run rate of more than $37 billion for its AI business, up 123% year-over-year.
In this regard, Nadella pointed out that Microsoft is raising money from OpenAI in other ways. “They’re a big customer of ours, not just on the AI accelerator side, but on all the other computing sides. So we want to serve them well. And, of course, we have equity capital.”
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This refers to OpenAI’s commitment to purchase more than $250 billion worth of Microsoft cloud services and Microsoft’s 27% stake in OpenAI.
Finally, Nadella emphasized that the relative importance of OpenAI in the industry, especially in enterprises, is not as advanced as it once was, as enterprises often want to use multiple AI models.
“We offer the widest selection of models of any hyperscaler, so customers can choose the right model for their workloads like OpenAI, Anthropic, and open source. Over 10,000 customers use multiple models,” he said.
Only time will tell if this deal is truly a win-win. Meanwhile, Microsoft continues to deliver cloud growth and benefits.
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