Here’s what’s on our plate today:

• 🧠 Deep dive: OpenAI & Microsoft’s tense AI partnership

• 🤖 Would you back a federal probe into Big Tech contracts?

• 🔧 Toolkit: Top AI tools to try this weekend

• 📊 Headlines roundup for context

Let’s dive in. No floaties needed…

The Laboratory

Inside Microsoft and OpenAI’s AI power struggle

From its early startup roots to generating over $10 billion in annual recurring revenue (ARR) in under three years, OpenAI’s ascent has been nothing short of meteoric. Since the launch of the ChatGPT chatbot, the company has launched business products, including its API, and aims to achieve $125 billion in revenue by 2029. In March, OpenAI closed a $40 billion funding round in March, at a valuation of $300 billion, marking the largest private tech deal on record.

Even as OpenAI continues to be one of the most prominent names in the AI space, its business practices, leadership, and partnership with Microsoft have come under intense scrutiny, both from investors and the public at large. Over the past week, the headlines suggest that the relationship between OpenAI and Microsoft, one of the startup’s early backers, may be reaching an inflection point.

According to reports, OpenAI executives are considering publicly accusing Microsoft of anticompetitive behaviour throughout their relationship, going as far as to consider asking for a U.S. federal regulatory review of their contract with Microsoft.

But before we get to the souring of relations between the startup and its BIg Tech backer, let us take a look at how that relationship came into existence, how did it help OpenAI become one of the driving forces in AI and why is that the ChatGPT-maker is now trying to find a way out of the deal.

How a billion-dollar AI alliance began

OpenAI was founded as a nonprofit with $1 billion in funding from Silicon Valley investors Sam Altman, Peter Thiel, and LinkedIn co-founder Reid Hoffman, among others, in 2015. The startup, however, also had a for-profit entity that was created in 2019 to take in outside investment. The same year, it received $ 1 billion in funding from Microsoft in exchange for an exclusive, multi-year collaboration focused on AI supercomputing. The deal also granted Microsoft’s Azure “preferred” status for OpenAI’s projects.

At the time, OpenAI said the investment from Microsoft would help it pursue "artificial general intelligence," or AGI.

Microsoft, meanwhile, said the two companies would jointly build new AI technologies on Microsoft's Azure cloud computing service. The two also said that OpenAI would move many, though not all, of its services to Azure.

An interesting thing to note here is that when the deal was announced, OpenAI said the nonprofit's mission would take precedence over turning a profit, even with Microsoft’s growing involvement.

Tighter tech integration sets the stage

Even before OpenAI rose to prominence, Microsoft successfully secured an exclusive license for GPT-3, enabling it to integrate the model across Azure and its products. The model was even trained on Azure’s AI supercomputer, and OpenAI continued to offer GPT-3 and other models via an Azure-hosted API.

ChatGPT’s success reshapes the partnership: in 2022, with the launch of ChatGPT, a GPT-3.5-powered chatbot that captured global attention, a new dynamic began to emerge between the two companies.

Recognizing the transformative potential of the model, Microsoft’s leadership began planning deeper product integration. To achieve this, Microsoft announced it would increase investments in the startup over multiple years to the tune of $ 10 billion. Microsoft also extended its exclusive Azure partnership and secured ongoing access to OpenAI’s models for integration into Bing, Office, and other Microsoft products.

Up to that point, Microsoft had not held any board role; however, all this was about to change.

Leadership crisis paves the way for Microsoft’s entry into governance

In 2023, OpenAI’s nonprofit board abruptly announced that co-founder and CEO Sam Altman was out. This did not sit well with employees who threatened to leave for jobs at Microsoft unless the board reinstated Altman. In the end, Altman returned, along with co-founder Greg Brockman and a revamped board of directors. All this happened within five days, during which almost every OpenAI employee threatened to quit, the company cycled through two interim CEOs, and Microsoft established an Altman-led AI division.

Though the coup at OpenAI failed to oust Sam Altman as the CEO, it did pave the way for Microsoft to take a non-voting, observer position on OpenAI's board. The seat allowed Microsoft to attend OpenAI's board meetings and access confidential information, but had no voting rights on matters including electing or choosing directors.

However, Microsoft soon left the position to mitigate antitrust concerns.

From mission-driven to market-ready

By March 2025, news emerged that OpenAI was to complete its transition to a for-profit company to secure the full $40 billion funding led by SoftBank, and it is in the final stages of raising. Earlier, the startup was expected to complete the transition under a two-year deadline, which it had begun to secure the capital it needed to develop the best AI models.

The funding from SoftBank had come under the Stargate Project, under which OpenAI was part of a new company that would invest $500 billion over the coming four years in building new AI infrastructure for OpenAI in the United States. The project would work with SoftBank having financial responsibility and OpenAI having operational responsibility. The initiative also involved infrastructure support from Nvidia, Oracle, and Microsoft.

OpenAI and Microsoft distrust intensifies

Even as OpenAI announced deeper collaborations publicly, the company was also making efforts to reduce Microsoft’s involvement in its transition to a for-profit organization. It is important to note here that OpenAI needed Microsoft’s approval to complete the transition.

To reduce its dependence on Microsoft, the startup has already started a major cloud services deal with Google Cloud to leverage Google’s robust infrastructure and meet escalating compute demands.

OpenAI also announced a collaboration with Oracle Cloud Infrastructure (OCI) to extend its Azure-based platforms. This partnership would provide additional capacity and increase resilience in the face of rising workload demands.

The company is also reported to be considering the idea of accusing Microsoft of anticompetitive behavior in their partnership. The efforts could reportedly involve seeking a federal regulatory review of the terms of its contract with Microsoft for potential violations of antitrust law, and possibly mount a public campaign.

The move from OpenAI could potentially unravel one of the most significant partnerships in the AI era and force Microsoft to let go off the idea of seeking greater concessions from the startup for exclusivity in cloud computing, OpenAI’s API on Azure, its right to to OpenAI API  (inclusive of model and infrastructure) for use within our products like Copilot.

What’s next for the AI power duo?

The evolving relationship between Microsoft and OpenAI highlights the complexities of partnerships in the high-stakes world of artificial intelligence. What began as a mutually beneficial alliance, with Microsoft providing vital funding and infrastructure, and OpenAI offering cutting-edge AI models, has grown into a tense dynamic marked by power struggles, shifting priorities, and regulatory scrutiny. As OpenAI matures from a nonprofit research lab into a multi-billion-dollar commercial force, it is increasingly looking to assert its independence and diversify its infrastructure partnerships with cloud providers like Google and Oracle. Meanwhile, Microsoft, once the dominant enabler of OpenAI’s rise, is facing potential regulatory and contractual challenges if the startup pursues claims of anticompetitive behavior.

These tensions underscore the broader theme of how strategic alliances in AI are vulnerable to friction as business incentives, governance structures, and national interests evolve. OpenAI’s transition into a fully for-profit entity and its growing ambition to shape the global AI landscape signal that its reliance on Microsoft may soon give way to a more competitive, multi-cloud future. What remains to be seen is whether the two companies can continue to collaborate while navigating diverging interests, or whether one of tech’s most influential partnerships is heading toward an irreparable split.

TL;DR

Because we know you’re too busy, so it’s basically like when Ross and Rachel “were on a break”:

• OpenAI and Microsoft’s once-tight partnership is unraveling, as each fights for a bigger slice of the AI pie.

• OpenAI is moving away from exclusive reliance on Microsoft Azure, signing major cloud deals with Google and Oracle.

• Tensions are rising, with OpenAI reportedly considering legal action against Microsoft for anticompetitive practices.

• The result? The future of AI could shift from BFFs to frenemies—welcome to the next round of the tech soap opera.

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Headlines You Actually Need

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• German firms submit rival bids for EU AI data centre, aiming to strengthen Europe's AI infrastructure.

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Weekend To-Do (Generated by GPT, Verified by You)

• Meet My AI Front Desk—instantly set up a virtual receptionist that greets, schedules, and answers customer questions 24/7, no acting classes required.

• Dive into Artbreeder to blend, remix, and conjure up wild new images with just a few clicks—perfect for artists or meme lords.

• Korbit brings automated, intelligent code reviews straight to your GitHub, GitLab, or Bitbucket repos. Who’s the code whisperer now?

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