OpenAI and Microsoft Are Avoiding a Messy Breakup

By far the most finicky part of OpenAI’s necessary conversion into a for-profit company was reconciling its convoluted partnership with Microsoft Corp. With the year-end deadline fast approaching, they have made a deal both sides can live with for now, though it sets out the timeline for an eventual split.

Microsoft’s shrewd $13.75 billion investment in 2019 required OpenAI to work with Microsoft and its Azure cloud platform — an arrangement that sent Microsoft’s valuation soaring. But as the artificial-intelligence race intensified, things became untenable: OpenAI needed more computing power than Microsoft was able to build, and Sam Altman, OpenAI’s co-founder and chief executive officer, wanted greater freedom to raise the money to do that. Along the way, frictions between the two companies, and questions about how their two cultures meshed, were starting to emerge. It’s hard to be both partners and competitors at the same time.