OpenAI Caps Microsoft Revenue Share at US$38bn in New Deal

Following a renegotiated contract in April, OpenAI is agreeing to cap the total revenue it shares with Microsoft at US$38bn, as reported by The Information. 

The payment cap is expected to save the ChatGPT-maker an estimated US$97bn through 2030 compared to the uncapped terms of their previous arrangement. 

This, in turn, will help the company present a stronger long-term pitch to investors as it works toward a public offering.

Executives familiar with the matter say this offering could take place as soon as the end of this year. 

Microsoft has invested US$13bn in the AI pioneer since 2019. That investment is now valued at approximately US$135bn, representing a 27% diluted ownership stake.

A fixed-cost model

Under the previous terms, the revenue share payments to Microsoft had no ceiling. This restructure converts what was an open-ended tax on the growth of OpenAI into a fixed and predictable cost.

Previously, Microsoft had said that revenue-sharing payments from the ChatGPT maker will continue through 2030. These payments will be made at the same previously agreed percentage but remain subject to the new overall cap. 

The new agreement simplifies the financial relationship considerably. OpenAI now pays Microsoft 20% of its revenue through 2030 with the hard cap at US$38bn. 

This rate holds regardless of technology milestones or declarations regarding artificial general intelligence (AGI). 

The previous terms tied payments to the achievement of AGI, a concept that industry experts are unable to define or measure. This shift provides both companies with greater financial certainty as they move forward. 

Enabling new partnerships

The restructuring also shifts the intellectual property (IP) arrangement to a non-exclusive licensing model that runs through 2032. 

Previously, Microsoft held exclusivity over the products of OpenAI through its Azure cloud platform. Now, the start-up can serve its products on any cloud provider, although Azure maintains a priority relationship.

This change allows OpenAI to forge new partnerships with big tech firms such as Amazon and Google. It means the company can sell to enterprises that run on AWS or Google Cloud. 

Previously, these customers were forced through the infrastructure of Microsoft. Given that AWS commands the largest share of the cloud market, this opens a significant revenue channel. 

The October 2025 version of the deal also included a US$250bn Azure commitment from OpenAI. It required an independent panel to verify AGI progress before certain terms shifted. Those terms reflected a partnership where Microsoft was pulling significant leverage over its partner.

Navigating legal challenges

OpenAI is prioritising core tools like Codex and ChatGPT while scaling back experimental projects like Sora. The amended Microsoft agreement will simplify operations to provide flexibility and certainty. 

While Microsoft remains the primary cloud partner, OpenAI can now serve products across any cloud provider.

The restructuring also occurs as the company faces a lawsuit filed by Elon Musk in 2024. He claims OpenAI co-founders, Sam Altman and Greg Brockman, abandoned the original nonprofit mission of the organisation.

Musk is seeking US$150bn in damages from OpenAI and its backer ⁠Microsoft to ​be paid to the non-profit, and for ​Altman and Brockman to be removed from their roles.

Despite legal pressure and competition from Anthropic, OpenAI reached a valuation of US$852bn this year. 

With the new deal, the AI pioneer has secured a pathway to forge alliances with other technology giants and pursue its goal of artificial general intelligence on its own terms.