Microsoft Considers Legal Action Over $50B Amazon-OpenAI Cloud Deal

Microsoft is considering legal action against its partner OpenAI and Amazon over a $50 billion deal that could violate its exclusive cloud agreement with the ChatGPT maker, the Financial Times reported on Wednesday.

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.

The dispute centers on 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 FT report said, citing sources.

Reuters could not immediately verify the report. Microsoft, Amazon and OpenAI did not immediately respond to Reuters’ requests for comment.

FT said 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.

“We know our contract,” a person familiar with Microsoft’s position told the newspaper. “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.”

Microsoft was one of OpenAI’s earliest investors, infusing $1 billion in the firm in 2019 and $10 billion at the beginning of 2023. In September last year, the two signed a non-binding deal under new relationship terms, paving the way for OpenAI to sign deals with SoftBank, Nvidia and Amazon.

In a joint statement last month, Microsoft and OpenAI said Microsoft maintained its “exclusive license and access to intellectual property across OpenAI models and products” and that Azure remained the exclusive cloud provider for OpenAI’s models.

While the statement sought to outline the 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.

(Reporting by Tanna in Bengaluru; Editing by Janane Venkatraman)