alt Hacker NewsThis agreement feels so friendly towards OpenAI that it's not obvious to me why Microsoft accepted this. I guess Microsoft just realized that the previous agreement was kneecapping OpenAI so much that the investment was at risk, especially with serious competition now coming from Anthropic?
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Microsoft is a major shareholder of OpenAI, they don't want their investment to go to 0. You don't just take a loss on a multiple-digit billion investment.
Probably more that they are compute constrained. In his latest post Ben Thompson talks about how Microsoft had to use their own infrastructure and supplant outside users in the process so this is probably to free up compute.
1- Getting OpenAI's models in Azure with no license fee is pretty nice. 2- Microsoft owns ~15-27% of OpenAI, if the agreement was hurting OpenAI more than it was helping Microsoft, seems reasonable to change the terms.
> Microsoft will no longer pay a revenue share to OpenAI.
I feel this looks like a nice thing to have given they remain the primary cloud provider. If Azure improves it's overall quality then I don't see why this ends up as a money printing press as long as OpenAI brings good models?
This is probably a delayed outgrowth of the negotiations last year, where Microsoft started trading weird revenue shares and exclusivity for 27% of the company.
$250b committed to azure helps. especially when some of that is your own investment coming back.
What aspects of the deal do you think kneecapped OpenAI the most?
OpenAI found a way to circumvent the exclusivity. The deal was poorly defined by Microsoft. OpenAI had started selling a service on AWS that had a stateful component to it, not purely an API. Obviously Microsoft didn’t like that and confronted Altman, and this is the settlement of that confrontation, OpenAI doesn’t need to do workarounds, Microsoft won’t sue to enforce exclusivity, and Microsoft doesn’t have to pay dev share to OpenAI. AWS is a much bigger market so OpenAI doesn’t care.