AI 'Bromance' Is Faltering: Microsoft and OpenAI's Partnership Shows Signs of Strain

The once strong partnership between Microsoft and OpenAI, hailed as the “best bromance in tech,” is beginning to show cracks as financial pressures and differing priorities strain the relationship between the two companies.

The New York Times reports that the partnership between Microsoft and OpenAI, the maker of the popular ChatGPT AI chatbot, has long been considered one of the most significant collaborations in the tech industry. However, recent developments suggest that the relationship between the two companies is not as rock-solid as it once appeared.

According to interviews with 19 people familiar with the relationship between Microsoft and OpenAI, the partnership has been strained by financial pressure on OpenAI, concern about its stability, and disagreements between employees of the two companies. The tension is particularly notable given the fact that Microsoft has invested heavily in OpenAI, pumping $13 billion into the start-up over the past five years.

One of the key points of contention between the two companies revolves around OpenAI’s need for more computing power and financial support. Last fall, OpenAI CEO Sam Altman asked Microsoft CEO Satya Nadella if the tech giant would invest billions more in the start-up. While Nadella was initially willing to continue supporting OpenAI, he reconsidered after Altman was briefly ousted by OpenAI’s board of directors in November.

As OpenAI continued to request more money and computing power from Microsoft, the tech giant remained hesitant to increase its investment. This reluctance has put OpenAI in a difficult position, as the company expects to lose $5 billion this year and relies heavily on Microsoft’s cloud computing systems to develop its AI technologies.

In response to Microsoft’s hesitancy, OpenAI has sought to renegotiate its deal with the tech giant, pushing for lower costs and the ability to purchase computing power from other companies. In June, Microsoft agreed to an exception in the contract, allowing OpenAI to sign a roughly $10 billion computing deal with Oracle. OpenAI has also sought to broaden its investor base, securing strategic investments from companies like Nvidia and MGX, a tech investment firm controlled by the United Arab Emirates.

Despite these efforts, the relationship between Microsoft and OpenAI remains strained. Some OpenAI employees have complained that Microsoft is not providing enough computing power, while others worry that if another company were to beat OpenAI in the race to develop artificial general intelligence (AGI), it would be Microsoft’s fault for not offering sufficient support.

Microsoft, for its part, has begun to hedge its bets on OpenAI. In March, the company paid at least $650 million to hire most of the staff from Inflection, an OpenAI competitor. The team, led by former Inflection CEO Mustafa Suleyman, is working on developing AI technologies that could potentially replace what Microsoft currently obtains from OpenAI.