"I hope to maintain the partnership for decades to come."
Satya Nadella, Chief Executive Officer (CEO) of Microsoft (MS), noted earlier this year that this no longer describes the relationship between MS and OpenAI. The close partnership that has existed since 2019 appears to be showing signs of strain. Although the GPT model has been commercialized through MS Azure cloud, and ChatGPT technology has been integrated into key MS products such as Office and Bing, it is now interpreted that a conflict over technological leadership and a phase of checks and balances has emerged.
◇ OpenAI, U.S. Ministry of National Defense contract… a signal of '脱MS' (detaching from MS)
The decisive moment for the tension to surface came on the 16th (local time), when OpenAI signed a contract worth $200 million (approximately 274.4 billion won) with the U.S. Department of Defense (DOD). OpenAI has decided to utilize its advanced AI models to develop defense administrative systems and cyber defense support functions.
Interestingly, OpenAI had previously provided AI solutions to government agencies through MS Azure cloud, but this time it launched a separate business program called "OpenAI for Government" and successfully secured a sole contract. This contract exemplifies a scenario where the U.S. government, which had been receiving OpenAI models through the Microsoft cloud (Azure OpenAI Service), bypassed intermediaries and directly engaged with OpenAI. From MS's perspective, this is interpreted as a crisis where it could lose a key customer.
OpenAI is also expanding its collaborations with other cloud providers such as Google and Oracle. In particular, the contract with Google Cloud is being regarded as a striking collaboration between ‘maximal competitors’ in AI. ChatGPT poses a threat to Google, which holds a 90% share of the global search market. Nevertheless, OpenAI decided to leverage Google’s resources to meet its significant computational demands. This strategy is seen as OpenAI’s attempt to move beyond a dependency on MS and diversify its cloud infrastructure.
This strategic shift is intertwined with a restructuring within OpenAI. The company is currently in negotiations to transition its structure to a profit-seeking public benefit corporation (Public Benefit Corporation, PBC). In this process, special voting rights held by MS serve as an obstacle. MS has invested $13 billion to hold 49% equity in OpenAI, and the contractual structure involves technology monopolies and revenue sharing terms.
Within OpenAI, there is a clear inclination to curb MS's influence. According to The Wall Street Journal (WSJ), OpenAI executives are considering filing an antitrust lawsuit against MS, arguing that the existing contract structure limits competition. While MS is the largest investor holding a 49% equity stake in OpenAI’s profit-seeking corporation, OpenAI has a dual structure where a ‘nonprofit parent company (OpenAI Inc.) governs a subsidiary (OpenAI Global LLC),’ meaning that MS is only an investor without board voting rights and has no management authority.
The issue lies in the contract structure. MS designated its cloud service 'Azure' as the exclusive hosting infrastructure for model deployment through the initial agreement with OpenAI, securing automatic access rights to technologies and assets in the future. Recent moves to acquire AI startup WindSurf also revealed attempts to exclude the technology from the scope of MS's contract. This indicates that the existing contract has hindered OpenAI’s acquisition of independent technologies and business expansion, ultimately limiting competition in the AI market. Under U.S. antitrust law, the determination of 'abuse of market power' is judged not by ownership percentage but by the substantive effect of competition limitation, suggesting that there is a structure that allows for lawsuits against MS, which is also an investor and partner.
◇ From a technological alliance to technological competition… reshaping the industrial landscape
MS is also accelerating its independent efforts. Recently, it recruited AI expert Mustafa Suleyman to expand its own AI model ecosystem, 'Copilot', and is actively pursuing a multi-model strategy that utilizes various models aside from OpenAI.
While the two companies maintain an outward stance that "close cooperation will continue," the reality is that a competitive framework is quickly solidifying. ChatGPT threatens MS's search service 'Bing', while OpenAI is striving for full independence in infrastructure and data centers.
Industry experts believe that the conflicts between the two companies could lead to significant changes across the AI industry, moving beyond a simple investor-investee relationship. Anticipated repercussions include regulatory signals from the U.S. government, restructuring in the cloud market, and increased uncertainty among corporate clients. In particular, there is an analysis suggesting that "the structure reliant on a single model has reached its limits, and now a modular approach that combines multiple AI models according to specific situations is emerging as a new strategy for corporations."
Choi Byeong-ho, a professor at the Korea University Artificial Intelligence Research Institute, said, "OpenAI and MS initially joined forces out of strategic necessity, but the structure was not sustainable for a lasting partnership. OpenAI no longer has any reason to depend on MS as it has already secured sufficient investment and a technological foundation for independence. While MS has sought breakthroughs by integrating the GPT model into Office, Bing, and Windows, it appears to be caught in a dilemma as market responses fell short of expectations."