Why OpenAI wants to slash its revenue share with Microsoft
What's the story
OpenAI, the company behind ChatGPT, has notified its investors about a major cut in the revenue share offered to its biggest backer, Microsoft. The move comes as part of a broader restructuring effort that will see OpenAI's nonprofit parent retain control of the company. The step is likely to curtail CEO Sam Altman's power within the firm.
Financials
A look at the revenue-sharing agreement
In a financial forecast shared with investors, OpenAI detailed plans to cut the percentage of revenue shared with Microsoft by at least 50% by the end of this decade. Under their current agreement, OpenAI is obligated to share 20% of its revenue with Microsoft until 2030. However, recent reports indicate that OpenAI has told some potential and existing investors about its plan to reduce it to just 10% by the same year.
Collaboration
Microsoft remains bullish on OpenAI
Despite the revenue sharing changes, Microsoft remains keen on accessing OpenAI's tech beyond 2030. In January, Microsoft changed some terms of its OpenAI deal after partnering with Oracle and Japan's SoftBank Group to build AI data centers in the US. Microsoft said it has "revenue sharing agreements that flow both ways" with OpenAI and key aspects of their partnership will remain unchanged through 2030.
Future plans
OpenAI comments on partnership with Microsoft
An OpenAI representative told The Information, "We continue to work closely with Microsoft, and look forward to finalizing details of this recapitalization in the near future." This restructuring move is part of a broader strategy by OpenAI to redefine its financial commitments and operational structure.