OpenAI and Microsoft Cap Revenue-Sharing Payments at $38 Billion Ahead of Potential IPO, Report Suggests

Microsoft and OpenAI Agree to Revenue-Sharing Cap of $38 Billion

Microsoft and OpenAI have finalized a renegotiation of their landmark partnership, capping total revenue-sharing payments between the two companies at $38 billion. The agreement, reported by The Information on Monday, may pave the way for OpenAI's public offering as early as the end of this year.

The revenue-sharing cap emerged from a contract renegotiation completed last month, which also created room for OpenAI to forge new partnerships with companies including Amazon and Google. Microsoft confirmed in April that revenue-sharing payments from OpenAI would continue through 2030 at the same previously agreed percentage, subject to an overall cap.

Revenue-Sharing Cap: A Breakdown

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The payment cap could help OpenAI present a stronger long-term pitch to investors as it works toward a public offering. Microsoft's early investment in OpenAI, totaling approximately $13 billion since 2019, helped establish OpenAI as a pioneer in artificial intelligence and powered significant growth at the Windows maker's Azure cloud-computing business.

Microsoft's early wager on OpenAI has yielded extraordinary returns. The company targeted a $92 billion return from its large early investments in OpenAI, a goal included in Microsoft planning documents from early 2023 and disclosed in federal court in Oakland, California. Since Microsoft's early backing, OpenAI's valuation has skyrocketed to $852 billion as of the end of March.

As part of OpenAI's restructuring last year, Microsoft received a 27% ownership stake in the startup. The court proceedings in Oakland stem from a 2024 lawsuit in which Elon Musk accused fellow OpenAI co-founders Sam Altman and Greg Brockman of abandoning the startup's founding mission as a nonprofit to benefit humanity when it took steps to operate as a for-profit business.

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OpenAI, Altman, Brockman, and Microsoft have all denied any wrongdoing, characterizing Musk's claims as baseless harassment aimed at boosting his own artificial intelligence startup, xAI, which launched in 2023. The renegotiated contract and the newly disclosed revenue cap represent the latest attempt by both parties to redefine the boundaries of a relationship that has reshaped the global technology landscape since Microsoft made its first investment in OpenAI in 2019.