A quiet but serious tug-of-war is unfolding between two of the biggest names in artificial intelligence — Microsoft and OpenAI. At the heart of the standoff is a clause buried in their 2019 partnership deal, one that suddenly looks a lot more important as the AI world edges closer to the idea of artificial general intelligence, or AGI.
Back when AGI was still more science fiction than strategy, Microsoft and OpenAI shook hands on a deal. Part of that agreement said that once OpenAI hits AGI — or what it calls “sufficient AGI” — Microsoft’s exclusive access to the tech could be cut off. It seemed harmless at the time. But now, with OpenAI leaders suggesting they might be on the brink of something big, Microsoft isn’t feeling quite as comfortable.
Reports say Microsoft is asking OpenAI to scrap that clause. OpenAI, so far, isn’t budging.
Microsoft has invested over $10 billion into OpenAI, has exclusive rights to host its models on Azure, and has built the tech into flagship products like Microsoft 365 and GitHub Copilot. Understandably, it wants assurances that AGI won’t be suddenly yanked out of reach — especially if that "sufficient AGI" label is something OpenAI can apply unilaterally.
OpenAI’s board can declare AGI in “good faith,” at which point Microsoft’s exclusive access would technically end. But Microsoft CEO Satya Nadella has publicly cast doubt on such definitions, calling AGI benchmarks “nonsensical.”
There’s also another layer of complexity. OpenAI is trying to restructure its for-profit arm into a public-benefit corporation — a move that legally requires Microsoft’s greenlight. But after months of talks, they’re still not on the same page.
Microsoft is reportedly open to owning a 35% stake in this new structure. But it wants more than just equity. It’s also seeking long-term guarantees on access to OpenAI’s intellectual property — AGI or not.
Meanwhile, exclusivity clauses tied to Azure hosting limit OpenAI from licensing its tools elsewhere. That may change once AGI is officially declared and if Microsoft agrees to loosen its grip. But for now, that’s a big if.
Despite the tension behind the scenes, both companies continue to stress that the partnership is still going strong. In a joint statement emailed to Reuters, they said: “We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing, and we are optimistic we will continue to build together for years to come.”
Still, the mood in the industry suggests this AGI clause has become a high-stakes fault line. As the AI race speeds up and the line between cutting-edge and control gets blurrier, what was once just a futuristic footnote could soon decide the shape of power in AI’s next chapter.