Stargate: US President Donald Trump joined the world's leading tech stalwarts to tout a multibillion-dollar artificial intelligence (AI) project led partly by OpenAI. However, Microsoft was mentioned only as a technology partner in the joint venture called ‘Stargate’, which was launched by OpenAI, SoftBank Group Corp., and Oracle Corp.
This came despite Microsoft investing almost $14 billion in OpenAI and using the startup’s AI models for its next-generation cloud services. In a blog post, the software giant said OpenAI could use rival cloud services to train and run its AI models with Microsoft’s permission, watering down an exclusivity contract.
According to Bloomberg, the flurry of announcements prompted renewed speculation that the Microsoft-OpenAI relationship has frayed, although each party currently has more to gain together than apart. Over time, analysts have noted that Microsoft has become less willing to spend even more money financing the computing power OpenAI requires to retain a lead in AI.
In 2023, Microsoft was close to a deal to invest tens of billions of additional dollars in OpenAI. At the time, OpenAI Chief Executive Officer Sam Altman was talking to Microsoft about helping fund a massive expansion of AI infra with investors in Asia and the Middle East. However, Altman was briefly fired, exposing instability at the heart of OpenAI.
Altman was reinstalled as CEO, but the brief upheaval prompted Microsoft to abandon plans to invest more money. According to Bloomberg, Altman’s infrastructure plans have since changed several times, but Microsoft CEO Satya Nadella had lost enthusiasm for contributing significant sums.
The New York Times previously reported Microsoft’s planned investment in OpenAI. Microsoft did pump $750 million into OpenAI’s most recent $6.6 billion funding round. However, its refusal to make a larger commitment prompted Altman to look for other partners. According to Bloomberg, Microsoft may invest in an OpenAI infrastructure project, including possibly Stargate.
OpenAI needs more computing capacity to fulfil its ambitions, and companies of its current scale do not generally work with a single partner. The revised deal between OpenAI and Microsoft indicates that the two companies continue to work together closely. Hence, Microsoft views the revised contract with OpenAI as advantageous.
The software giant retains its share of OpenAI’s revenue and is the largest investor in a company that may now become even more valuable — though the size of that stake could change as the startup works to restructure as a for-profit. Microsoft also still has access to OpenAI models, even if they are trained in a data centre funded by Softbank or Oracle.
The Stargate joint venture and rejiggered partnership with OpenAI also let Microsoft offload some AI spending onto rival companies. Meanwhile, the Stargate project has already become a lightning rod, with Tesla's Elon Musk accusing OpenAI of lacking sufficient funds to achieve its ambitions.
“They don’t actually have the money,” Musk wrote on his social media platform X, hours after the announcement. Musk wrote: “On the other hand, Satya definitely does have the money.” That prompted a rejoinder from Microsoft’s chief. “All this money is not about hyping AI, but is about building useful things for the real world!” he wrote on X.
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