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• A look at what’s causing friction between OpenAI and Microsoft as their AI ambitions diverge.
• The numbers, events, and strategic moves are putting pressure on a $13 billion alliance.

The partnership between OpenAI and Microsoft was never ordinary. From the start, it was a high-wire act, merging OpenAI’s mission-driven AI development with Microsoft’s enterprise muscle. Billions of dollars exchanged hands. Microsoft embedded OpenAI’s models into everything from Bing to Azure to Word. OpenAI gained a powerful cloud partner and access to global distribution. Microsoft, in turn, was handed access to the world’s most advanced generative AI.

It was never meant to be a merger. But it looked like the future of joint tech development—until now.

Microsoft has poured approximately $13 billion into OpenAI since 2019. This includes an initial $1 billion investment followed by up to $12 billion in subsequent funding rounds. In return, Microsoft secured exclusive access to OpenAI’s models via Azure and integrated these tools across Microsoft 365 and Copilot products.

The investment also supported the deployment of a specialised infrastructure powered by over 30,000 Nvidia GPUs to run OpenAI models at scale.

According to a recent Wall Street Journal report, that future may be in question. Interviews with insiders from both companies suggest that the relationship, once viewed as symbiotic, is now strained. The reasons are complex but not unfamiliar: diverging priorities, commercial ambitions, and questions of control.

What began as an idealistic partnership to democratise AI has started to resemble a turf war.

Friction at the Peak of AI’s Hype

The trouble began to surface as OpenAI grew more commercial. It launched ChatGPT as a standalone product. It introduced enterprise versions. Suddenly, Microsoft was no longer just the conduit—it was a customer. That shift altered perceptions internally. Teams at Microsoft began to question the transparency of OpenAI’s roadmap. New models were being tested or released with little notice.

“We’re building on sand,” one Microsoft engineer told the Journal. “We don’t know what’s coming next.”

The quote captures a growing anxiety inside Microsoft. While it had invested heavily in OpenAI and hosted the models on Azure, it wasn’t always in the loop. New capabilities, safety shifts, and product Directions were sometimes shared with Microsoft Teams at the same time they were unveiled to the public.

In big tech, that’s more than inconvenient—it’s destabilising.

ChatGPT usage metrics underline the scale of disruption. By mid-2025, ChatGPT had reached over 800 million weekly active users and processed more than 1 billion queries daily. Its website saw 4.5 billion monthly visits in March 2025. OpenAI now forecasts hitting 1 billion users by the end of the year.

From Research Lab to Product Company

OpenAI was never a typical research lab, but its transformation has been rapid. The release of ChatGPT in 2022 made it a household name. Within a year, it launched paid tiers, mobile apps, a GPT store, and enterprise APIs. It was acting less like a nonprofit and more like a SaaS powerhouse.

OpenAI’s revenue has followed suit. From $3.5 million in 2020, the company scaled to an estimated $3.7 billion in revenue for 2024, with projections of $12.7 billion in 2025.

Microsoft, which had integrated OpenAI’s models into Bing and Copilot, found itself in an awkward spot. It depended on OpenAI but was also trying to maintain its product edge. As OpenAI built out its user-facing tools, it sometimes competed directly with Microsoft’s offerings.

And Microsoft wasn’t standing still. The company is now developing its small language models, including the Phi-3 series. It has deepened partnerships with other model makers like Mistral. Redundancy is one reason. Autonomy may be another.

What once looked like a collaboration now feels like strategic hedging.

A Fragile Alignment of Values

One issue appears to be philosophical: how quickly AI should be rolled out and how risks should be handled. OpenAI’s board upheaval in late 2023, which led to the temporary ousting of CEO Sam Altman, revealed deep divisions within the company about safety and governance.

Microsoft supported Altman during that crisis. It even offered to hire him and his team. When the dust settled and Altman returned, Microsoft took a seat on OpenAI’s board—albeit as a non-voting observer. But the episode left scars.

For all their shared interests, Microsoft and OpenAI do not have the same risk tolerance or the same governance structure. Microsoft answers to shareholders. OpenAI answers to a nonprofit charter—and increasingly, its commercial ambitions. tolerance 

In 2025, OpenAI’s board explored converting the company into a public-benefit corporation to unlock up to $30 billion in additional funding from SoftBank, contingent on Microsoft’s approval. The current stake structure limits the profits Microsoft can realise. If OpenAI fails to convert by year-end, it could lose $20 billion in pending investments.

What This Means Inside Silicon Valley

Among developers and startups, the tension is being watched closely. Many build on OpenAI models via Microsoft’s Azure. Others use OpenAI directly. The lack of clarity about the roadmap, licensing, and support has made some developers nervous.

OpenAI’s product releases have sometimes surprised Microsoft. In a competitive market, that kind of surprise can be damaging. It suggests a lack of alignment and shared planning. For customers, it creates a difficult question: Who owns the future of this tech?

The split also reflects a broader shift in Silicon Valley. AI, once the domain of open collaboration and academic publication, is now a proprietary race. Partnerships that once seemed collaborative are now viewed as strategic footholds—or liabilities.

A Mirror of the Industry’s Growing Pains

This conflict is not just about two companies. It’s about the maturing of an industry. AI is no longer experimental. It’s operational. And that shift requires new rules, clearer contracts, and perhaps a dose of realism about what partnerships can—and cannot—deliver.

The OpenAI-Microsoft relationship was never built to last forever. It was structured around mutual needs: compute and credibility for OpenAI, technical advantage and cachet for Microsoft. Now that both are maturing in their directions, the cracks are natural.

But the stakes are high. Together, these two firms influence how AI is deployed in schools, hospitals, banks, and government offices. Their tools shape writing, coding, research, and customer support. A rift between them doesn’t just impact investors—it affects the infrastructure of modern work.

The UK’s Competition and Markets Authority cleared Microsoft’s $13 billion investment in OpenAI in March 2025 but noted potential future risks to competition. This mirrors similar scrutiny in the EU.

The Questions Still Hanging

Is OpenAI planning to go independent from Azure? Will Microsoft deprioritise OpenAI in favour of its in-house models? Could the two companies part ways publicly? Or are these growing pains that will stabilise over time?

There are no clear answers yet. But the questions themselves are telling. The age of unquestioned alliances in big tech may be over.

is already exploring broader infrastructure deals with Oracle, CoreWeave, Google Cloud, and SoftBank’s data centres, part of its multicloud diversification strategy—including the $500 billion Stargate project.

For now, OpenAI and Microsoft remain partners. Their tools still complement each other. Their public messaging is cordial. But behind the scenes, it’s clear that the balance is shifting.

And for an industry that moves as fast as AI, even small shifts at the top can send tremors throughout the ecosystem.