Microsoft Loses Exclusive Cloud Provider Status with OpenAI, Remains a Key Partner

Microsoft, the largest investor in OpenAI and its primary cloud partner, is no longer the exclusive provider of computing capacity for the artificial intelligence startup.

In a blog post on Tuesday, Microsoft clarified its ongoing partnership with OpenAI. While OpenAI will now explore other providers for additional computing capacity, Microsoft retains the “right of first refusal,” allowing it the opportunity to meet OpenAI’s needs before the startup approaches other vendors.

This shift in their relationship coincides with President Donald Trump’s announcement of the Stargate Project, a collaboration between OpenAI, Oracle, SoftBank, and Microsoft to bolster U.S.-based AI infrastructure. The venture includes an initial investment of $100 billion, with plans to scale up to $500 billion over the next four years. A separate entity will manage the project.

Oracle has been designated as a “key initial technology partner” alongside Arm, Microsoft, and Nvidia to build the data center infrastructure, OpenAI noted in a blog post.

“These data centers are already under construction,” Oracle Chairman Larry Ellison revealed at a White House press conference with President Trump. “The first phase is happening in Texas, with each building spanning half a million square feet. Currently, 10 buildings are in progress, with plans to expand to 20 and additional locations beyond Abilene, Texas.”

Following the announcement, Oracle’s stock surged by 7% on Tuesday.

Microsoft’s relationship with OpenAI dates back to 2019, when it invested $1 billion in the startup, prompting OpenAI to migrate its services to Microsoft’s Azure cloud platform. As OpenAI’s computing demands grew, Microsoft supplemented its infrastructure by partnering with third-party providers like CoreWeave.

Oracle joined the mix last year, further diversifying OpenAI’s cloud ecosystem. In June, Oracle announced that its cloud services would be integrated with Microsoft’s Azure AI platform, reflecting a growing collaboration between the two companies.

Despite the evolving dynamics, OpenAI stated it will continue to expand its use of Azure. Microsoft confirmed a recent “large Azure commitment” from OpenAI for model training and product development. Additionally, Microsoft retains rights to OpenAI’s intellectual property for use in its products, such as Copilot, and remains the exclusive supplier for OpenAI’s application programming interface (API) requests.

However, tensions between the two companies have surfaced. In July, Microsoft officially named OpenAI as a competitor, signaling a more complex relationship. During a December podcast, Microsoft CEO Satya Nadella discussed OpenAI CEO Sam Altman’s ambitious vision, emphasizing the need for mutual accommodation.

“What he wants to do, I have to accommodate for, so that he can do what he does,” Nadella said. “And he needs to accommodate for the discipline that we need on our end, given the overall constraints that we may have.”