Open AI ends Microsoft legal peril over its $50B Amazon deal | Tech Crunch

Overview

On Monday, Microsoft and Open AI announced that they have, once again, renegotiated the deal binding the two companies. Despite some opinions on X that frame it as a victory for the Chat GPT maker over the Windows giant, both sides are walking away winners.

Most important, the new terms solve an issue that was hanging over Open AI’s head since it signed its up-to-$50 billion dollar deal with Amazon.

Details

With this new deal, instead of Microsoft having exclusive access to all of Open AI’s products and IP until the magical day when Open AI produces AGI, it’s partnership has a definitive timeline. This contract gives Microsoft a non-exclusive license to Open AI IP for models and products through 2032.

The two companies are still calling Microsoft Open AI’s “primary cloud partner,” meaning that the bulk of Open AI’s cloud will likely be served by Azure for the six years this deal covers, even as Open AI rushes to build its own data centers with other partners. In October, Open AI agreed to buy an additional $250 billion worth of Microsoft’s cloud. This line is a message to Microsoft shareholders that Open AI will still be an enormous Azure customer.

Open AI products will ship “first on Azure, unless Microsoft cannot and chooses not to support the necessary capabilities,” the companies say. But, critically, “Open AI can now serve all its products to customers across any cloud provider.”

Again, “first” is not defined clearly in this announcement, whether that means exclusive on Azure only for some time period or just that Microsoft will also be among the vendors carrying Open AI’s latest products.

But the most important part of this term: it solves the possibility that Microsoft could sue Open AI over the AI lab’s deal with Amazon.

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To recap that messiness: In February, Open AI announced that Amazon was investing up to

50 billion in the model maker, comprised of a

15 billion initial investment and another $35 billion “in the coming months when certain conditions are met,” the companies said, without specifying what those conditions were.

In exchange, Open AI agreed to co-develop a “stateful runtime technology” on AWS Bedrock (the AWS service that serves up various AI models and services). Stateful runtime is the tech that supports AI agents, allowing them to remember tasks and contexts for long periods of time.

Open AI also promised that AWS would have exclusive rights to serve up Open AI’s new agent-making tool Frontier. And there’s the rub.

Open AI’s initial agreement with Microsoft prevented Open AI from selling Frontier exclusively on AWS, and possibly prevented AWS from selling it at all.

While Microsoft had previously agreed to let Open AI run certain select products, like consumer Chat GPT, on other cloud providers, it retained exclusive rights to any Open AI product accessed through an API, such as Frontier.

In fact, the same day that Open AI announced its AWS deal, Microsoft publicly refuted the AWS exclusively terms, writing (emphasis Microsoft’s):

“Microsoft maintains its exclusive license and access to intellectual property across Open AI models and products. … Azure remains the exclusive cloud provider of stateless Open AI APIs. … Any stateless API calls to Open AI models that result from a collaboration between Open AI and any third party – including Amazon – would be hosted on Azure. … Open AI’s first party products, including Frontier, will continue to be hosted on Azure.“

Microsoft also emphasized that its terms were in effect until Open AI achieved AGI. The Financial Times reported that Microsoft even contemplated legal action if it had to enforce these contract terms.

So, the new agreement eliminates Microsoft’s exclusive rights and solves the AWS legal peril. In a post on X, Amazon CEO Andy Jassy celebrated the deal, adding that it meant Open AI’s models would become available to customers on AWS Bedrock.

Very interesting announcement from Open AI this morning. We’re excited to make Open AI's models available directly to customers on Bedrock in the coming weeks, alongside the upcoming Stateful Runtime Environment. With this, builders will have even more choice to pick the right…— Andy Jassy (@ajassy) April 27, 2026

While this deal is good for Open AI, Microsoft walked with some wins, too. The new deal now allows Microsoft to stop paying a revenue share to Open AI, while Open AI will continue to pay revenue share to Microsoft through 2030, although this is now subject to a cap.

Exactly how much cash will flow to Microsoft is hard to tell, but it’s likely in the billions. Last quarter, Microsoft reported that it made $7.5 billion in a single quarter from its investment in Open AI.

The kicker is that Microsoft remains a major shareholder in Open AI, owning about 27 percent of the for-profit entity, it said in October. It financially benefits from Open AI’s growth, even the sales it makes on AWS.

The downside, of course, is that Microsoft loses out on any extra cloud services it would be able to sell as a result of an exclusive deal with Open AI.

That may not matter much. Just like Open AI has been courting Microsoft’s biggest competitors, Microsoft has a new, cozy relationship with Open AI rival Anthropic for cloud giant to use its Claude AI to power agentic products.

The biggest winners here are enterprises, who get to choose their models and their clouds while the giants compete with each other to serve them.

Here’s a timeline of the recent changes in Microsoft’s relationship with Open AI.

In October, Microsoft and Open AI announce a new agreement to help Open AI fend off the lawsuit from Elon Musk about its corporate structure that gives Open AI the ability to run non-API-accessed products on other clouds.

In November, Open AI and Amazon sign their first multi-year agreement, in which Open AI contracts for $38 billion worth of AWS cloud.

In February, Amazon announces an up to $50 billion investment in Open AI, pending “certain conditions” including the exclusive tech development and hosting deal for Frontier and stateful tech. On the same day, Microsoft refutes that AWS will have that tech exclusively.

In March, FT publishes that Microsoft is considering legal action.

In April, Open AI and Microsoft announce a new deal, that includes a calendar end date for their exclusive partnership and allowing Open AI to run all of its products on other clouds. Microsoft no longer has to pay Open AI revenue share. Microsoft remains a major shareholder in Open AI.

Key Takeaways

On Monday, Microsoft and Open AI announced that they have, once again, renegotiated the deal binding the two companies
Most important, the new terms solve an issue that was hanging over Open AI’s head since it signed its up-to-$50 billion dollar deal with Amazon
With this new deal, instead of Microsoft having exclusive access to all of Open AI’s products and IP until the magical day when Open AI produces AGI, it’s partnership has a definitive timeline
The two companies are still calling Microsoft Open AI’s “primary cloud partner,” meaning that the bulk of Open AI’s cloud will likely be served by Azure for the six years this deal covers, even as Open AI rushes to build its own data centers with other partners
Open AI products will ship “first on Azure, unless Microsoft cannot and chooses not to support the necessary capabilities,” the companies say