OpenAI is circulating communications about plans to reduce the percentage of revenue it shares with Microsoft over the next several years. According to a report from The Information, OpenAI currently shares 20% of its revenue with Microsoft, but that figure is expected to drop to 10% by 2030.
This move comes amid OpenAI’s broader strategic shift, including its decision to abandon plans for a full for-profit transformation and instead maintain control under its nonprofit parent organization. These developments signal a recalibration of OpenAI’s financial and operational priorities—one that could have major implications for Microsoft’s AI ambitions.
OpenAI and Microsoft’s partnership, which dates back to 2023, includes a reciprocal revenue-sharing agreement that was designed to evolve over time. Under the current deal, OpenAI shares 20% of its revenue with Microsoft, but financial projections indicate that this figure will drop to 10% by 2030.
Microsoft’s multi-billion-dollar investment in OpenAI secured exclusive access to OpenAI’s models and intellectual property, including rights to OpenAI’s APIs on Azure. The agreement also ensures that Microsoft retains first refusal rights on new AI capacity, meaning OpenAI must offer Microsoft the opportunity to expand its infrastructure before seeking other partners.
Despite the revenue shift, Microsoft has confirmed that its core agreement with OpenAI remains intact through 2030. However, once the contract expires, Microsoft may have to start paying directly for access to ChatGPT, rather than benefiting from the current revenue-sharing model.
OpenAI’s decision to cut Microsoft’s revenue share in half is part of a larger effort to restructure its financial agreements with key partners. The company has told investors that it expects to share only 10% of its revenue with Microsoft and other business partners by the end of the decade.
In a letter to employees, OpenAI CEO Sam Altman acknowledged the company’s evolving financial strategy, stating:
We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware. We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners.
This shift suggests that OpenAI is prioritizing long-term autonomy over deep financial entanglements with Microsoft.
Backing Down from For-Profit Diversification
OpenAI’s revenue restructuring coincides with its decision to abandon plans to become a fully for-profit company. Initially, OpenAI had explored transitioning into a publicly traded entity, but mounting legal and regulatory concerns—along with pressure from civic leaders and investors—led the company to retain its nonprofit governance structure.
This move is a win for critics, including Elon Musk, who had argued that OpenAI was straying from its original mission to develop AI for the benefit of humanity. Instead of shifting to a traditional corporate model, OpenAI will now operate as a Public Benefit Corporation (PBC), ensuring that its mission remains central to its business strategy.
Microsoft’s AI Diversification Strategy
With OpenAI reducing its revenue share and maintaining nonprofit control, Microsoft is actively diversifying its AI investments to reduce its reliance on OpenAI as its sole large language model (LLM) provider.
Microsoft is now folding in AI models from xAI, DeepSeek, and its own Small Language Models (SLMs) to broaden its AI ecosystem. This strategic shift allows Microsoft to develop AI solutions independently, rather than relying exclusively on OpenAI’s technology.
However, this diversification comes with a potential downside: Microsoft’s 10-year deal with OpenAI expires in 2030, and at that point, Microsoft may have to start paying directly for access to ChatGPT rather than benefiting from its current revenue-sharing agreement.
Another factor influencing Microsoft’s AI strategy is the growing gap in user adoption between Copilot and ChatGPT.
Despite Microsoft’s deep integration of Copilot into Windows 11, Microsoft 365, and Edge, the AI assistant has struggled to gain traction compared to OpenAI’s ChatGPT. Reports indicate that Copilot has around 20 million weekly users, while ChatGPT boasts a staggering 400 million weekly users.
This disparity in user engagement shifts leverage in OpenAI’s favor, making Microsoft’s diversification efforts even more critical. If Microsoft cannot close the gap in AI adoption, it may find itself increasingly dependent on OpenAI’s technology, even as OpenAI moves toward greater independence.
OpenAI’s decision to reduce Microsoft’s revenue share, maintain nonprofit control, and back away from for-profit diversification marks a pivotal moment in the AI industry.
For Microsoft, these changes underscore the need for AI diversification—whether through new partnerships, proprietary models, or expanded AI research. As the company integrates xAI, DeepSeek, and its own Small Language Models, it is clear that Microsoft is preparing for a future where OpenAI is no longer its exclusive AI provider.
However, with Copilot trailing ChatGPT in user adoption, Microsoft faces an uphill battle in establishing its AI dominance. The next few years will be critical in determining whether Microsoft can successfully pivot or whether OpenAI will continue to hold the upper hand in the AI landscape.
One thing is certain: the AI industry is evolving rapidly, and the relationship between OpenAI and Microsoft is far from settled.
