OpenAI’s Calculated Exit Strategy from Microsoft Partnership

At the World Economic Forum in Davos, Salesforce CEO Marc Benioff dropped a few words about the Microsoft OpenAI partnership situation, as reports surfaced about the ChatGPT-parent exploring new alliances with SoftBank and Oracle.

Microsoft’s five-year alliance with the GPT-parent faces strain, with OpenAI’s surprising exit strategy from its Microsoft partnership, according to the New York Times, was predominantly educed by AI company’s financial pressures, limited computing support, and contract disagreements.

Now, OpenAI is looking to expand partnerships with SoftBank and Oracle as it prepares its giant $500 billion data center project dubbed Stargate, revealed by President Trump on Tuesday.

The Inside Story of Microsoft’s Partnership with OpenAI

OpenAI is struggling financially, and Microsoft, well, is not really pulling its weight to help the AI company to meet its computing needs. Another hurdle straining the tech company’s relationship has to be the artificial general intelligence (AGI) contract clause that revokes Microsoft’s access to OpenAI technology upon achieving AGI – AI matching human cognitive intelligence.

In response to the news of Microsoft OpenAI partnership, Benioff added that this is crucial now when Microsoft was planning to develop its model of AI, adding that in the future, the Microsoft partnership with OpenAI will be gone and they should start building their own models of AI.

“I think it’s extremely important that OpenAI gets to other platforms quickly because Microsoft’s making their own AI, and I don’t think Microsoft is going to use OpenAI going forward,” Benioff said, adding “that’s why they hired Mustafa Suleyman. And Mustafa Suleyman and Sam Altman are not best friends.”

Benioff’s commitment seems to shed light on the OpenAI partnership with Microsoft and the tensions between OpenAI CEO Sam Altman and Microsoft’s new head of AI, Mustafa Suleyman, who joined Microsoft after being co-founder of DeepMind and Inflection.

Benioff recalled the intense conflict between Altman and Suleyman at last year’s Davos, where the two seemed to clash during panel discussions. The Microsoft OpenAI partnership was bound to reach its finale at some point, but few expected it to happen this early on.

Salesforce doesn’t just install OpenAI models, it has also invested in Anthropic, a competitor to OpenAI.

Back in 2019, Microsoft first invested $1 billion in OpenAI, but now, as OpenAI approaches threshold for achieving AGI, its relationship with Microsoft is clearly taking a different direction.

According to reports, OpenAI has struggled to scale its AI models due to limited data center capacity that Microsoft could no longer provide alone. The exclusive cloud deal between both companies was supposed to expire when OpenAI achieved AGI, according to CEO Sam Altman. But as OpenAI expands its infrastructural capabilities, the company has started making proposals with other tech giants.

Back in 2019, Tensions between both companies began to mushroom when OpenAI introduced its own competing enterprise product. Since then, insiders from both companies reported dissatisfaction among employees working together, including claims that the OpenAI team looks down on Microsoft staff.

New Recruitment Cracking the Partnership

For many experts, Microsoft’s recruitment of Mustafa Suleyman in early 2024 looked like a response to the rise of OpenAI, especially since he expressed uncertainty toward the concept of AGI several times.

Microsoft OpenAI’s partnership shows signs fraying that Microsoft intends to be able to compete with OpenAI directly. Despite these ongoing tensions, comments from Salesforce CEO Marc Benioff suggest a possible spin in the AI environment.

Microsoft is working on a large language model, the MAI-1, and recently formed a new AI-focused group led by Jay Parikh to develop AI agents. Particularly, this did not include OpenAI which highlights the fact that Microsoft is focusing completely on its own AI projects.

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