Microsoft adjusts OpenAI partnership amid oracle and softbank joint venture.

Microsoft has modified its partnership terms with OpenAI following the announcement of a joint venture between OpenAI, Oracle, and Japan’s SoftBank Group to establish AI data centers in the United States, potentially worth up to $500 billion.

The Stargate Initiative

Dubbed “Stargate,” the joint venture aims to ensure the U.S. maintains its lead in the global AI race. U.S. President Donald Trump unveiled the initiative, emphasizing its role in countering competitors like China. The project will leverage advanced chips from Nvidia and involve other investors, including the UAE-based firm MGX.

Microsoft’s Role and Partnership Updates

Since 2019, Microsoft has held exclusive rights to build OpenAI’s computing infrastructure. While the Redmond-based tech giant has now approved OpenAI’s collaboration with Oracle for additional capacity, it retains key aspects of the partnership:

  • API Exclusivity: Microsoft retains exclusive rights to OpenAI’s API, ensuring Oracle cannot host OpenAI’s primary revenue-generating services.
  • Revenue Sharing: The companies maintain reciprocal revenue-sharing agreements.
  • Azure Commitment: OpenAI has renewed its commitment to Microsoft’s Azure cloud computing platform for supporting its products and model training.

Structure of the Joint Venture

The Stargate initiative will be structured as an independent entity, with OpenAI holding equity, governance rights, and operational control. The venture will have a distinct board, chaired by SoftBank CEO Masayoshi Son, and its own CEO. Microsoft, Nvidia, and Arm will serve as technology partners but are not equity investors.

Broader Implications

Microsoft’s adjustments to its agreement highlight its effort to balance supporting OpenAI’s expansion with protecting its strategic interests in AI technology and services. Meanwhile, the Stargate project underscores a growing trend of multi-stakeholder collaborations aimed at advancing AI capabilities, particularly in light of geopolitical competition.

Oracle, OpenAI, and other stakeholders have yet to comment further on the venture’s long-term implications.