OpenAI Caps Microsoft Revenue Share at US$38bn

OpenAI has renegotiated its contract with Microsoft to cap revenue sharing at US$38bn, according to The Information. The April deal could save the ChatGPT maker an estimated US$97bn through 2030 compared to the previous uncapped arrangement.

The revised terms could strengthen OpenAI's financial position as it prepares for a potential public offering. Executives familiar with the matter say this offering could take place as soon as the end of this year.

Microsoft has invested US$13bn in OpenAI since 2019. That investment is now valued at approximately US$135bn, representing a 27% diluted ownership stake.

Converting variable costs to fixed

The previous revenue share agreement had no ceiling on payments to Microsoft. The restructured deal converts an open-ended expense into a fixed and predictable cost.

Microsoft had said that revenue-sharing payments from OpenAI will continue through 2030. These payments will be made at the same previously agreed percentage but remain subject to the new overall cap.

OpenAI now pays Microsoft 20% of its revenue through 2030 with the hard cap at US$38bn. This rate holds regardless of technology milestones or declarations regarding artificial general intelligence.

The previous terms tied payments to the achievement of AGI, a concept that industry experts are unable to define or measure. This shift provides both companies with greater financial certainty.

Opening routes to new customers

The restructuring shifts the intellectual property arrangement to a non-exclusive licensing model that runs through 2032. Previously, Microsoft held exclusivity over OpenAI products through its Azure cloud platform.

The start-up can now serve its products on any cloud provider, although Azure maintains a priority relationship. This change allows OpenAI to forge new partnerships with companies such as Amazon and Google.

OpenAI can now sell to enterprises that run on AWS or Google Cloud. Previously, these customers were forced through Microsoft infrastructure.

AWS commands the largest share of the cloud market. This opens a new revenue channel for OpenAI.

Simplifying operations and reducing complexity

The October 2025 version of the deal included a US$250bn Azure commitment from OpenAI. It required an independent panel to verify AGI progress before certain terms shifted.

OpenAI is prioritising core tools like Codex and ChatGPT while scaling back experimental projects like Sora. The amended Microsoft agreement will simplify operations to provide flexibility and certainty.

While Microsoft remains the primary cloud partner, OpenAI can now serve products across any cloud provider. The company faces a lawsuit filed by Elon Musk in 2024.

Musk claims OpenAI co-founders Sam Altman and Greg Brockman abandoned the original non-profit mission of the organisation. Musk is seeking US$150bn in damages from OpenAI and its backer Microsoft to be paid to the non-profit, and for Altman and Brockman to be removed from their roles.

Positioning for growth and partnerships

OpenAI reached a valuation of US$852bn this year. The company faces competition from Anthropic alongside the legal pressure from Musk.

The new deal provides OpenAI with a pathway to forge alliances with other technology companies. The company can now pursue its goal of artificial general intelligence on its own terms.

The contract renegotiation could improve OpenAI's position with potential investors ahead of a public offering. The fixed cost model provides greater predictability for financial planning and revenue forecasting.