OpenAI, Microsoft agree to cap revenue sharing at $38 billion, The Information reports
May 11 (Reuters) - OpenAI has agreed to cap total revenue it shares with Microsoft under their agreement at $38 billion, The Information reported on Monday, citing a person with knowledge of the arrangement.
The development comes as OpenAI and Microsoft renegotiated a contract last month, making room for the ChatGPT-maker to forge new partnerships with Big Tech firms such as Amazon.com and Google.
The payment cap could help OpenAI present a stronger long-term pitch to investors as it works toward a public offering, which some executives said could take place as soon as the end of this year, according to the report.
Reuters could not immediately verify the report. OpenAI and Microsoft did not immediately respond to requests for comment.
Microsoft said in April that revenue-sharing payments from OpenAI would continue through 2030, and that payments would be made at the same previously agreed percentage, subject to an overall cap.
The Windows maker's early investment, totaling $13 billion since 2019, helped pave the way for OpenAI's rise as an AI pioneer and powered growth at the software major's Azure cloud-computing business.
Rivals such as Anthropic are increasingly competing with OpenAI, whose long domination of the AI sector helped the ChatGPT maker reach a valuation of $852 billion earlier this year.
OpenAI is now doubling down on its core tools such as Codex and ChatGPT, while it has scaled back or shut down some experimental initiatives in recent months, including projects such as Sora.
The AI startup is also facing a lawsuit filed in 2024 by Elon Musk, one of its original co-founders, who has alleged that co-founders Sam Altman and Greg Brockman abandoned OpenAI's original nonprofit mission to develop the technology for the benefit of humanity.
Musk is seeking $150 billion in damages from OpenAI and its backer Microsoft to be paid to the nonprofit, and for Altman and President Brockman to be removed from their roles.
(Reporting by Ananya Palyekar in Bengaluru, additional reporting by Jaspreet Singh in Bengaluru; Editing by Rashmi Aich and Leroy Leo)