OpenAI and Microsoft reach a "divorce agreement": Microsoft's "revenue share" reduced to 8%

With OpenAI and Microsoft finalizing new cooperation terms, OpenAI is expected to reduce its revenue sharing expenses by $50 billion.

On September 12, according to media reports, OpenAI has informed some shareholders that its revenue sharing ratio paid to Microsoft will significantly decrease from nearly 20% this year to about 8% by 2030. This means that by 2030, OpenAI will be able to retain over $50 billion in additional revenue for itself.

The negotiations between the two parties are not limited to this. Discussions are still ongoing regarding how the partnership will evolve once OpenAI achieves Artificial General Intelligence (AGI) and the costs associated with OpenAI renting servers from Microsoft.

Significant Reduction in Revenue Sharing

According to the initial cooperation agreement, Microsoft has the right to receive 20% of OpenAI's revenue until 2030.

The new 8% sharing ratio means that by 2030, OpenAI is expected to share nearly $56 billion in revenue with Microsoft and other partners, significantly lower than the previous estimate of about $74 billion.

It is currently unclear why OpenAI expects the revenue sharing with Microsoft to be lower than the original agreement of 20%.

However, some OpenAI executives previously hoped that Microsoft would exclude unreleased future products from the existing revenue sharing agreement, such as the PhD-level AI agent with a monthly fee of up to $20,000.

Notably, this 8% target is more aggressive than earlier predictions made earlier this year. At that time, OpenAI expected to share about 10% of its revenue with partners by 2030.

Reports indicate that the high 20% sharing ratio this year may reflect OpenAI's agreement to support certain Siri queries on Apple devices, although this collaboration does not seem to have contributed significantly to OpenAI's subscription sales.

Initial Outline of Equity Restructuring Plan

The two parties are also negotiating arrangements following OpenAI's achievement of AGI.

AGI refers to artificial intelligence that reaches a level of intelligence comparable to that of humans. Wall Street Watch previously mentioned that the existing contract stipulates that once OpenAI proves its technology can achieve AGI, Microsoft will lose exclusive access to OpenAI's technology.

However, Microsoft is striving to modify or completely remove this AGI clause. The two parties are also negotiating how many server resources OpenAI will rent from Microsoft.

Although many aspects of the agreement are still under discussion, some arrangements have been basically finalized.

Under the new corporate structure, OpenAI's nonprofit organization and Microsoft are expected to each receive about one-third of the shares. Currently, OpenAI allows employees to sell shares at a valuation of $500 billion.

It is unclear whether the new non-binding cooperation agreement announced by Microsoft and OpenAI on Thursday includes changes to the latest revenue sharing plan with investors.

In recent weeks, teams from both sides have been engaged in intensive negotiations. OpenAI's Chief Financial Officer Sarah Friar, Microsoft's Chief Financial Officer Amy Hood, and their subordinate teams hold weekly meetings to finalize the restructuring details