OpenAI and Microsoft, once close allies, are now engaged in a fierce battle over the definition of artificial general intelligence (AGI) and related contractual terms. When OpenAI CEO Sam Altman claimed, &#34;We have mastered the method to build AGI,&#34; Microsoft CEO Satya Nadella dismissed it as &#34;absurd metric manipulation.&#34; This struggle for the definition of the ultimate form of artificial intelligence is leading one of the most influential partnerships in the tech industry to a crossroads.
According to a recent in-depth investigation by tech media The Information, a $10 billion cooperation agreement signed between OpenAI and Microsoft in 2023 has triggered significant disagreements over the &#34;artificial general intelligence (AGI)&#34; clause. Microsoft is demanding the removal of a key clause in the contract that allows OpenAI to terminate technology licensing upon achieving AGI, but negotiations remain deadlocked as of May 2025, which could jeopardize OpenAI's plans for the largest IPO in history.
The core of the contract dispute lies in the &#34;termination of technology licensing clause.&#34; According to the original agreement between the two parties in 2019, OpenAI's nonprofit board can determine: When artificial intelligence evolves to the AGI stage that surpasses human capabilities, OpenAI has the right to immediately cut off Microsoft's access to the technology. &#34;Everyone is laughing at this idea,&#34; recalled an insider involved in the negotiations. At that time, Microsoft executives viewed this sci-fi-like scenario as nothing more than the naive fantasies of technological utopians.
However, the rapid development of AI has dramatically changed the situation in just a few years. Altman has claimed on multiple occasions that AGI is &#34;within reach,&#34; and in January 2024, he publicly stated: &#34;We have now mastered the method to build AGI,&#34; defining AGI as &#34;a system capable of solving human-level complex problems across multiple domains.&#34; But Nadella countered in the Dwarkesh Patel podcast: &#34;A true benchmark is a 10% annual growth in the world economy,&#34; with Microsoft executives privately judging that AGI is unlikely to be achieved before the contract expires in 2030.
Over the past three years, Microsoft has utilized AI technology developed by OpenAI to launch a series of new software tools, such as Copilot. If not restricted by the &#34;termination of technology licensing clause,&#34; under the terms of this software giant's funding support for OpenAI, Microsoft could use this technology until 2030.
<h2>Seeking Solutions: Shifting Focus to Artificial Superintelligence</h2>
For Microsoft's products in competition with tech giants like Google, gaining access to OpenAI's latest technology is crucial. According to two individuals involved in the discussions, as the improvements in OpenAI's technology and business success have become more apparent over the past two years, sometimes even at Microsoft's expense, concerns about maintaining access have intensified.
Reports suggest that there may be a solution to break the deadlock. According to an insider close to the negotiations, the two companies are considering possibly replacing the AGI benchmark with another technology, commonly referred to as artificial superintelligence, which has greater profit potential and the ability to change the world. This would push the goal further into the future while still ensuring that Microsoft ultimately loses access to OpenAI's cutting-edge technology
At the same time, according to a person involved in the trading negotiations, Microsoft rejected a series of concession requests related to the restructuring from OpenAI, including giving up the right to receive 20% of OpenAI's revenue or allowing customers to access OpenAI models through competing cloud service providers. OpenAI hopes to be exempt from revenue sharing for high-end products (such as the $20,000 monthly AI for PhDs). Financial calculations indicate that if OpenAI achieves its revenue target of $17.4 billion by 2030, the revenue share amount will exceed Microsoft's annual cloud computing profits.
Despite these points of contention, according to one person who has spoken with Nadella, executives from both companies continue to meet daily to discuss their contracts, and Nadella and other Microsoft executives still believe they can reach an agreement without a complete breakdown.
According to internal forecast documents, OpenAI needs to burn through $46 billion over four years to maintain R&amp;D, and going public has become a survival necessity. The deadlock is affecting the investment nerves of Silicon Valley. &#34;If the restructuring fails, the special equity structure will turn the IPO into a bubble,&#34; admitted a top venture capital partner holding OpenAI shares.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/9c0d5967-d90b-4337-86b5-679481af982c.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/9c0d5967-d90b-4337-86b5-679481af982c.png"/>
<h2>Alliance Fractures Accelerate</h2>
Looking back at the cooperative honeymoon period in 2019, Microsoft provided a lifeline of computing power to OpenAI, while OpenAI used GPT technology to help Microsoft create flagship products like GitHub Copilot. However, the unexpected popularity of ChatGPT at the end of 2022 completely changed the balance of power.
Now, the fractures in the alliance between Microsoft and OpenAI are rapidly emerging on the commercial battlefield, with reports indicating that the rift has spread to operational levels:
<blockquote>
• Computing Power Competition: In 2024, OpenAI turned to Google Cloud due to insufficient computing power from Microsoft and reached a cooperation agreement with Oracle;
• IP Disputes: Microsoft's AI head Suleyman has repeatedly protested against OpenAI for concealing key technical details (such as the &#34;chain of thought&#34; reasoning mechanism);
• Alternative Solutions: Microsoft is accelerating the development of its own Phi model and recruiting the Inflection team to create alternative solutions
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OpenAI and Microsoft are embroiled in a contractual crisis over the definition of Artificial General Intelligence (AGI). Microsoft demands the removal of the clause "the technology license can be terminated upon achieving AGI," but negotiations have reached a stalemate. Altman claims that AGI is just around the corner, while Nadella questions its standards. The dispute jeopardizes OpenAI's IPO plans, and the rift in their cooperation has extended to competition for computing power, technology concealment, and alternative research and development

- OpenAI and Microsoft are currently in a contentious dispute over the definition of artificial general intelligence (AGI) and related contract terms, which threatens their partnership.  
- The disagreement centers on a clause allowing OpenAI to terminate Microsoft's access to technology upon achieving AGI, with negotiations stalled as of May 2025.  
- As both companies seek solutions, they are considering shifting focus to artificial superintelligence, while ongoing tensions have led to operational rifts, including power struggles and IP disputes.

The root of the conflict between Microsoft and OpenAI: AGI