Microsoft and OpenAI look to be on the verge of a divorce.
The tech giant's partnership with the ChatGPT developer gave it a head start in the artificial-intelligence race, but that could now be at risk.
OpenAI's executives have debated accusing Microsoft of anticompetitive behavior and potentially even seeking a federal regulatory review of the terms of their contract in an escalating dispute between the partners, The Wall Street Journal reported, citing people familiar with the matter.
Microsoft has pumped $13 billion into OpenAI since 2019 but doesn't currently own equity in the company, instead receiving a share of future profits. The two companies are in conflict over what stake Microsoft might receive in a future restructuring, while another issue is the terms of OpenAI's acquisition of coding start-up Windsurf and whether Microsoft will receive access to its intellectual property, according to the Journal. Microsoft offers its own competing AI-powered coding tools.
OpenAI and Microsoft didn't immediately respond to requests for comment. In a joint statement, they told the Journal that talks are ongoing and they are optimistic about the future of their partnership.
Microsoft shares were down 0.9% in early trading Tuesday.
OpenAI is currently structured as a nonprofit company with a board that oversees its for-profit business. The company had intended to become a more conventional profit-seeking company but scrapped the plan last month after discussions with civic leaders and the attorneys general of California and Delaware, who would be required to sign off on it.
Instead, the company's for-profit subsidiary will turn into a public-benefit corporation, requiring the company to balance shareholder interests and the public benefit in its decision-making. The two companies still face a tricky negotiation over what stake Microsoft would receive under the planned conversion.
OpenAI is under pressure to carry out its public-benefit conversion in order for a planned $30 billion investment from Japan's SoftBank, which had been dependent upon the restructuring, to go ahead. The investment values OpenAI at $300 billion, up from $157 billion in a funding round late last year.
OpenAI's funding round would enable it to continue to spend heavily on Microsoft's cloud-computing resources. However, OpenAI has also struck computing infrastructure deals with Oracle and CoreWeave.
Barron's owner News Corp has a content-licensing partnership with OpenAI.