Microsoft’s partnership with OpenAI traces back to the Windows Phone era, when CEO Satya Nadella was still using the device daily. A screenshot shared by The Verge’s Tom Warren shows emails between Sam Altman and Nadella dating to April 7, 2015 — suggesting the multibillion‑dollar alliance may have begun even earlier.
Nadella later admitted that pulling the plug on Windows Phone was a strategic mistake. But I digress... Microsoft is now doubling down on AI, integrating the technology across its products and services. This is primarily due to its partnership with OpenAI.
Microsoft corporate development lead Michael Wetter has now confirmed through testimony in the ongoing Musk v. Altman trial that it has spent more than $100 billion on its partnership with OpenAI, largely on infrastructure and hosting costs (via Bloomberg).
“We needed to build Azure infrastructure in advance of providing those services to OpenAI,” Wetter added. Microsoft incurred most of these costs before receiving any revenue from OpenAI.
This staggering figure underscores how central OpenAI has become to Microsoft’s AI strategy. In the same breath, it also shows how instrumental Microsoft's partnership has been to OpenAI's rapid growth.
It's worth noting that the $100 billion mentioned above includes Microsoft's $13 billion investment in OpenAI and is cumulative through the current fiscal year ending June.
While taking the stand on Monday, Microsoft CEO Satya Nadella indicated that he was “very proud” that Microsoft took the risk to invest in OpenAI when “no one else was willing” to bet on the ever-evolving technology. Despite doubts from Microsoft co‑founder Bill Gates, who opposed Satya Nadella’s $1 billion investment in OpenAI in 2019 due to its non‑profit structure, the deal went forward.
Microsoft and OpenAI recently renewed their vows under a new non-exclusive partnership, meaning the tech giant will no longer need to pay OpenAI a revenue share. The new deal capped OpenAI's revenue-sharing payments at $38 billion through 2030, saving it approximately $97 billion when compared to the terms in the original agreement.
Microsoft is building an OpenAI-free future
In an exclusive report by Reuters, Microsoft is reportedly exploring AI startup acquisitions, potentially emancipating itself from an overreliance on OpenAI to power its tech stack.
The report suggests that acquisitions will help Microsoft assemble top AI talent, accelerating progress toward developing an in‑house model as early as next year. The company has already made significant strides, even reassigning AI CEO Mustafa Suleyman to focus on frontier models and the pursuit of superintelligence.
Microsoft reportedly considered acquiring Cursor this spring but backed out, fearing antitrust scrutiny since it already owns GitHub Copilot, another code‑generation tool.
The company is exploring a possible acquisition of Inception, a startup developing LLMs with a different approach, though insiders say the deal may never happen.
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