Microsoft’s IP Rights No Longer Covers OpenAI’s Consumer Hardware

Since 2019, Microsoft and OpenAI have worked together to advance AI responsibly, with a shared goal of make AI widely accessible. Now, that partnership has been revised.

OpenAI is now a public benefit corporation (PBC), with Microsoft holding approx. 27 percent stake valued around $135 billion. This includes employees, investors, and the OpenAI Foundation. Previously, Microsoft had a 32.5 percent stake in OpenAI’s for-profit entity.

The new agreement keeps Microsoft at the center of OpenAI’s AI development. Microsoft retains exclusive IP rights for models, products, and Azure API access until AGI (Artificial General Intelligence) is declared. Here’re key details about the renewed partnership, as mentioned in the announcement post:

• Once AGI is declared by OpenAI, that declaration will now be verified by an independent expert panel.
• Microsoft’s IP rights for both models and products are extended through 2032 and now includes models post-AGI, with appropriate safety guardrails. 
• Microsoft’s IP rights to research, defined as the confidential methods used in the development of models and systems, will remain until either the expert panel verifies AGI or through 2030, whichever is first. Research IP includes, for example, models intended for internal deployment or research only. Beyond that, research IP does not include model architecture, model weights, inference code, finetuning code, and any IP related to data center hardware and software; and Microsoft retains these non-Research IP rights.
• Microsoft’s IP rights now exclude OpenAI’s consumer hardware.           
• OpenAI can now jointly develop some products with third parties. API products developed with third parties will be exclusive to Azure. Non-API products may be served on any cloud provider.
• Microsoft can now independently pursue AGI alone or in partnership with third parties.
• If Microsoft uses OpenAI’s IP to develop AGI, prior to AGI being declared, the models will be subject to compute thresholds; those thresholds are significantly larger than the size of systems used to train leading models today.   
• The revenue share agreement remains until the expert panel verifies AGI, though payments will be made over a longer period of time.
• OpenAI has contracted to purchase an incremental $250B of Azure services, and Microsoft will no longer have a right of first refusal to be OpenAI’s compute provider.
• OpenAI can now provide API access to US government national security customers, regardless of the cloud provider.
• OpenAI is now able to release open weight models that meet requisite capability criteria.

Overall, the revised agreement solidifies partnership of both tach giants while giving each space to grow.