Satya Nadella says Microsoft will use new OpenAI deal through 2032

In short: Microsoft CEO Satya Nadella said Microsoft can keep using OpenAI’s AI under a revised deal, and Microsoft does not have to pay OpenAI royalties for it.

What happened

Satya Nadella was asked on Microsoft’s earnings call how a revised partnership with OpenAI could affect Microsoft’s finances. He said Microsoft still has access to OpenAI’s intellectual property, meaning the underlying AI models and related products.

Nadella said Microsoft’s access is now royalty-free through 2032. Royalties are like per-use fees, similar to paying a percentage every time you sell a song that uses someone else’s music. Nadella summed up Microsoft’s plan by saying, “We fully plan to exploit it.”

The revised deal also means Microsoft no longer has exclusive access to OpenAI’s technology. That matters because OpenAI has also announced new products with Amazon, which is a major competitor to Microsoft in cloud computing (renting computing power and storage, like renting a fleet of computers over the internet).

Nadella argued that the OpenAI relationship still benefits Microsoft in other ways. He noted that OpenAI is a large customer of Microsoft’s cloud services, and Microsoft also owns a reported 27% stake in OpenAI. He also said many business customers want to use more than one AI model, so Microsoft offers a selection that includes OpenAI and others.

Why it matters

For regular people, this is mostly about where AI features show up and how much they cost. If Microsoft can use OpenAI’s AI without paying royalties, it may make it easier for Microsoft to bundle AI into products and cloud services without raising prices as quickly. But since OpenAI can also work closely with rivals like Amazon, customers should expect more choice, and more competition between big tech companies.

Source: TechCrunch AI