OpenAI Caps Microsoft Revenue Share to Boost Investor Appeal

OpenAI has agreed to limit the total revenue it will share with Microsoft to US$38bn following a contract renegotiation in April, according to The Information. The payment cap could save it an estimated US$97bn through 2030 when compared to the uncapped terms of the original arrangement.

The new structure could help the company present a more attractive long-term financial case to investors as it prepares for a public offering. According to executives familiar with the matter, this offering could take place as soon as the end of this year.

Microsoft has invested US$13bn in OpenAI since 2019. That investment is now valued at approximately US$135bn, representing a 27% diluted ownership stake in the company.

Converting growth tax to fixed cost

Under the original terms, revenue share payments to Microsoft had no upper limit. The restructure converts what was an open-ended tax on OpenAI's growth into a fixed and predictable cost line.

Microsoft had previously said that revenue-sharing payments from OpenAI will continue through 2030. These payments will be made at the same previously agreed percentage but are subject to the new overall cap.

The new agreement simplifies the financial relationship between the two companies. OpenAI now pays Microsoft 20% of its revenue through 2030 with the hard cap at US$38bn.

This rate applies regardless of technology milestones or declarations regarding artificial general intelligence (AGI). The previous terms tied payments to the achievement of AGI, a concept that industry experts are unable to define or measure.

This change provides both companies with greater financial certainty as they move forward.

Opening new revenue channels

The restructuring also changes the intellectual property arrangement to a non-exclusive licensing model that runs through 2032. Previously, Microsoft held exclusivity over OpenAI's products through its Azure cloud platform.

Now the company can serve its products on any cloud provider, although Azure maintains a priority relationship. This change allows OpenAI to forge new partnerships with technology firms such as Amazon and Google.

It means the company can sell to enterprises that run on AWS or Google Cloud. Previously, these customers were forced through Microsoft's infrastructure.

Given that AWS commands the largest share of the cloud market, this opens a material revenue channel for OpenAI. The October 2025 version of the deal also included a US$250bn Azure commitment from OpenAI.

It required an independent panel to verify AGI progress before certain terms shifted. Those terms reflected a partnership where Microsoft was pulling material leverage over its partner.

Streamlining operations amid legal pressure

OpenAI is prioritising core tools like Codex and ChatGPT while scaling back experimental projects like Sora. The amended Microsoft agreement simplifies operations to provide flexibility and certainty.

While Microsoft remains the primary cloud partner, OpenAI can now serve products across any cloud provider. The restructuring also occurs as the company faces a lawsuit filed by Elon Musk in 2024.

He claims OpenAI co-founders, Sam Altman and Greg Brockman, abandoned the original nonprofit mission of the organisation. Musk is seeking US$150bn in damages from OpenAI and its backer Microsoft to be paid to the non-profit, and for Altman and Brockman to be removed from their roles.

OpenAI reached a valuation of US$852bn this year despite legal pressure and competition from Anthropic. With the new deal, the company has secured a pathway to forge alliances with other technology firms and pursue its goal of artificial general intelligence on its own terms.