Microsoft loses status as OpenAI’s exclusive cloud provider

Microsoftthe largest investor in OpenAI and its main cloud partner, is losing its designation as the exclusive provider of computing power to the artificial intelligence startup.

In one blog post on Tuesday Microsoft said it is still in a favorable position with OpenAI. Going forward, when OpenAI seeks additional capacity, Microsoft will have the “right of first refusal” before OpenAI checks with other parties.

The change in their relationship was revealed as part of President Donald Trump’s announcement of the Stargate Project, a joint venture with OpenAI, Oracle and Softbank to invest billions of dollars in artificial intelligence infrastructure in the United States. Executives from the companies have committed to invest $100 billion and up to $500 billion over the next four years in the project, which will be created as a separate company.

Oracle is a “key initial technology partner” alongside ArmMicrosoft and Nvidia in setting up data center infrastructure, OpenAI said in a blog post.

“The data centers are actually under construction,” Oracle Chairman Larry Ellison said at a White House news conference with Trump. “The first of those are under construction in Texas. Each building is half a million square feet. There are 10 buildings under construction right now, but it will expand to 20 and other locations in addition to the Abilene location, which is is our first location.”

Oracle shares rose 7% on Tuesday.

In 2019, three years before the launch of ChatGPT, Microsoft invested $1 billion in OpenAI, which committed to moving its services to Azure. As OpenAI’s computing needs grew, Microsoft signed contracts with third-party cloud providers, such as CoreWeave, to supplement its Azure cloud infrastructure.

Oracle entered the mix last year. The database software manufacturer, as follows AmazonMicrosoft and Google in the cloud market, said i June that Microsoft’s Azure AI platform would be extended to Oracle’s cloud.

OpenAI said Tuesday it will continue to increase its use of Azure, and Microsoft said OpenAI recently made “a new, large Azure commitment” to products and model training. Microsoft still has rights to OpenAI’s intellectual property, which can go into products like Copilot. And it still has the exclusive right to provide computing requests to OpenAI’s application programming interface.

But the relationship has shown signs of strain, with Microsoft naming OpenAI as a competitor in July. Microsoft CEO Satya Nadella spoke about OpenAI CEO Sam Altman’s big ambitions at a podcast with investors Brad Gerstner and Bill Gurley released in December.

“What he wants to do, I have to accommodate so he can do what he does,” Nadella said. “And he has to accommodate the discipline we need on our end given the overall limitations we may have.”

CLOCK: President Trump talks about AI infrastructure investment