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💔 Why OpenAI and Microsoft Are in an “Open Relationship”

Have you ever wondered — if $Microsoft(MSFT)$   is OpenAI’s largest shareholder and its biggest cloud partner, shouldn’t OpenAI just stick to Azure?

Yet lately, OpenAI has been “seeing other people.”

It’s signed multi-billion-dollar cloud contracts with Oracle and CoreWeave.

It’s buying its own chips.

It’s even building its own data centers.

It’s as if a once-inseparable couple suddenly announced they’re entering an “open relationship.”

And strangely enough, Microsoft — the long-standing “spouse” — is okay with it.

So, what happened?

According to The Information, cracks began to appear in what once looked like Silicon Valley’s most perfect marriage. Here’s how it unfolded.

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💢 The First Rift: “You’re Not Fast Enough!”

The breaking point came down to one simple complaint — and it was fatal.

By late 2024, as GPT-4 Turbo and its successors ballooned in scale, OpenAI’s hunger for computing power turned from a gentle stream into a raging flood.

Inside OpenAI, executives — particularly CFO Sarah Friar — began openly venting frustration:

> “Microsoft isn’t delivering compute fast enough.”

For a company that iterates models on a daily cadence, waiting for GPUs was intolerable.

The problem wasn’t trivial.

Azure’s high-end GPU clusters were already fully booked — by both Microsoft’s enterprise clients and its own Copilot product lines.

Building a new super-data-center to train OpenAI’s next-gen models would take 12 to 18 months — from procurement to power supply and cooling.

For OpenAI, that’s an eternity.

But for Microsoft, it raised a deeper, existential question:

> How much financial and operational risk should it shoulder to keep feeding OpenAI’s insatiable appetite?

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♟ Microsoft’s Three-Layer Game

Rather than engage in an open-ended arms race, Microsoft took a step back and made a strategic calculation — balancing risk, regulation, and return.

1️⃣ The Financial Firewall — No Blank Cheques

Under CFO Amy Hood, Microsoft’s finance team refused to sign a “bottomless” investment commitment.

They feared that if AI monetisation failed to match the hype, billions in capital expenditures on specialised infrastructure could become sunk costs.

Microsoft’s own models suggested that to break even, OpenAI’s annual revenue would need to exceed US $60 billion by 2028 — a wildly aggressive assumption given the current maturity of enterprise AI adoption.

Microsoft, as a listed company, cannot gamble like a startup.

Its duty is to contain astronomical downside risk.

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2️⃣ The Regulatory Firewall — Keep the FTC Away

CEO Satya Nadella has been keenly aware of antitrust scrutiny from the U.S. FTC and EU regulators, who worry that exclusive compute access could amount to Microsoft controlling the world’s most influential AI company.

By allowing OpenAI to work with other cloud providers, Microsoft sent a clear message:

> “We’re not a monopoly — the market is open.”

That move wasn’t altruism; it was strategic insulation — a shield against future breakup orders or billion-dollar fines.

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3️⃣ The Strategic Core — Hold the Crown Jewels

Here lies the genius of Microsoft’s play.

While relaxing exclusivity clauses, it quietly locked down the most valuable assets through meticulous contract design:

Training Exclusivity: Microsoft remains the sole provider of the supercomputers that train OpenAI’s models — the beating heart of AI development.

Revenue Share: Microsoft collects a 20% cut of OpenAI’s revenue through 2030.

Guaranteed Rent: It expects to earn US $135 billion in server-rental revenue from OpenAI by then.

Tech Privileges: Microsoft keeps royalty-free access to OpenAI’s models, powering its own Copilot suite.

First-Refusal Rights: Microsoft holds the right of first refusal for OpenAI’s future compute needs.

In essence, Microsoft told OpenAI:

> “You can expand — but I still train your brain, share your income, and own the first call on your future hardware.”

It’s control without ownership — the ultimate power move.

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⚙️ OpenAI’s New Web of Partnerships

Once given the green light, OpenAI wasted no time building a multi-supplier ecosystem to fuel its ambitions.

Its recent deals include:

Oracle: Five-year agreement worth US $300 billion, securing 4.5 GW of dedicated AI capacity.

SoftBank: Partner in the US $500 billion “Stargate Project” to build global data centers.

CoreWeave: Cloud contract valued at US $22.4 billion.

Google Cloud: Supplementary GPU leasing.

Nvidia: Joint plan to invest up to US $100 billion in custom data centers.

By 2030, according to The Information, OpenAI’s payments to these partners could exceed what it pays Microsoft, with total server spending estimated around US $450 billion.

Exactly as Microsoft intended.

Let Oracle and SoftBank absorb the capital risk, while Microsoft keeps the royalty stream.

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🧩 Who Wins in the End?

Microsoft’s manoeuvre is a masterclass in strategic restraint.

It successfully offloaded capital and execution risk to competitors, while retaining the most lucrative pieces — compute training, revenue share, and technology rights.

Internally, some Microsoft executives doubt whether rivals can deliver such colossal infrastructure on schedule.

That quiet scepticism betrays confidence: Microsoft knows how far ahead it really is.

Could the company regret not owning all of OpenAI’s future upside? Perhaps.

But from a corporate-strategy standpoint, the decision is impeccably rational.

For a trillion-dollar firm like Microsoft, the goal isn’t to win every race — it’s to stay in the game no matter how it evolves.

And that’s exactly what it’s achieved:

No matter how the AI landscape shifts, Microsoft remains seated at the core of the table — enjoying the upside of growth, while sidestepping catastrophic downside risk.

Not a bet.

A blueprint.

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