Microsoft is considering legal action against its partner OpenAI and Amazon over a $50 billion deal that could potentially violate its exclusivity agreement with the ChatGPT-maker, according to a Financial Times report.
Last month, Amazon and OpenAI signed several agreements, including one that makes Amazon Web Services (AWS) the exclusive third-party cloud provider for Frontier, OpenAI’s enterprise platform for building and running AI agents.
According to the report, the dispute is over whether OpenAI can offer Frontier via AWS without violating the Microsoft partnership, which requires the start-up’s models to be accessed through the Windows-OS maker’s Azure cloud platform.
The Microsoft executives believed the approach was not feasible and would violate the spirit, if not the letter, of their agreement, and added that the companies were in talks to resolve the dispute without litigation ahead of Frontier’s launch.
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A person familiar with Microsoft’s position told FT, “We will sue them if they breach it. If Amazon and OpenAI want to take a bet on the creativity of their contractual lawyers, I would back us, not them.”
The disagreement also extends to technical nuances. Reports suggest that OpenAI and Amazon are working on a “stateful” runtime environment on AWS, which allows systems to retain memory and context over time.
Microsoft, however, appears to maintain that even such implementations should fall within the scope of its Azure exclusivity clause.
Despite the tensions, discussions are going on between the companies. Sources indicate that all parties are keen to avoid escalation into a legal confrontation.
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Microsoft has been one of OpenAI’s most significant backers. It had invested $1 billion in 2019, and a further $10 billion in 2023. The two companies also signed a revised, non-binding agreement last year that allowed OpenAI to explore partnerships with other firms, including Amazon, Nvidia, and SoftBank.
Microsoft and OpenAI had reiterated that Microsoft retains exclusive access to OpenAI’s intellectual property and that Azure remains the primary cloud platform for hosting its models in a joint statement issued last year.
While the statement tries to outline limits to the work that Amazon and OpenAI could undertake together without involving Azure, it said Microsoft was “excited to see” what the two would build together and that Frontier would continue to be hosted on Azure. As the AI industry gets increasingly competitive, the dispute could shape how partnerships between major player tech companies play out.