OpenAI, Microsoft to cap revenue-sharing at $38 billion

OpenAI and Microsoft have reportedly agreed to cap total revenue-sharing payments at $38 billion. The development ⁠comes as OpenAI and Microsoft renegotiated a contract last month, making room for OpenAI to forge new partnerships with companies such as Amazon and Google. The ⁠payment cap could help OpenAI present a stronger long-term pitch ‌to investors as it works toward a public offering, which some executives said could take place as soon as the end of this year, according to the ⁠report.

Microsoft confirmed in April that revenue-sharing payments from OpenAI would continue through 2030 at the same previously agreed percentage, subject to an overall cap, the terms of which The Information has now placed at $38 billion.

Microsoft's early investment in OpenAI, totaling approximately $13 billion since 2019, helped establish OpenAI as a pioneer in artificial intelligence and powered significant growth at the Windows maker's Azure cloud-computing business.

Microsoft targeted a $92 billion return from its large early investments in OpenAI, a goal included in Microsoft planning documents from early 2023.

Since Microsoft's early backing, OpenAI's valuation has skyrocketed to $852 billion as of the end of March. As of October, Microsoft's stake in the company was valued at approximately $135 billion. As part of OpenAI's restructuring last year, Microsoft received a 27 per cent ownership stake in the startup.