Microsoft and OpenAI face tension over a $50B Amazon deal

Amazon is getting in the middle of the Microsoft and OpenAI partnership, with reports now stating that Microsoft may be considering legal action against OpenAI over a $50 billion deal with Amazon.

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A new report from the Financial Times claims that Microsoft may be considering legal action against OpenAI, the company behind ChatGPT, with which Microsoft is actively engaged in a partnership. Notably, Microsoft invested $10 billion into OpenAI in 2023 as part of a major multi-year expansion deal, which earned Microsoft an approximately 27% stake in OpenAI. Part of the deal is that Microsoft provides OpenAI with access to its massive Azure cloud infrastructure, and in return, OpenAI shares approximately 20% of revenue and access to its models. There are also other smaller factors in the deal.

So, why would Microsoft want to sue OpenAI? Reports indicate Microsoft is concerned that OpenAI's $50 billion deal with Amazon may breach its existing agreement with OpenAI. The report states that people with knowledge of the situation between the two companies, Microsoft and OpenAI, are currently undergoing talks to reach a conclusion before it reaches court. According to OpenAI, the contract with Amazon doesn't breach its agreement with Microsoft.

It should be noted that it's in Microsoft's best interest to keep the dispute with OpenAI out of courts as it would give regulators an opportunity to swoop in and make things even more difficult for Microsoft than they already are, as the company is currently facing numerous investigations in numerous countries over alleged anti-competitive licensing practices.