Tensions Mount Between OpenAI and Microsoft Over IP and Equity

Published Date : 17/06/2025 

Tensions between OpenAI and Microsoft have escalated, with OpenAI executives considering accusing Microsoft of anticompetitive behavior and seeking a federal regulatory review. The dispute centers on intellectual property and equity stakes. 

Tensions between longtime partners OpenAI and Microsoft have reportedly reached a point where OpenAI executives have discussed accusing Microsoft of anticompetitive behavior and seeking a federal regulatory review of the terms of their contract.

The tensions center in part on whether Microsoft would have access to the intellectual property of Windsurf, if OpenAI acquires that coding startup, and how big Microsoft’s share of OpenAI would be if OpenAI converts into a public-benefit corporation, the Wall Street Journal (WSJ) reported, citing unnamed sources.

Asked about the report by the WSJ, the companies told the publication in a joint statement: “We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing and we are optimistic we will continue to build together for years to come.”

The reported dispute over the intellectual property of Windsurf came about because the agreement between the two companies provides Microsoft with access to all of OpenAI’s intellectual property (IP). However, because they have competing products for coding, OpenAI does not want Microsoft to have access to the IP of Windsurf, which OpenAI is acquiring for $3 billion, according to the report.

In the case of OpenAI’s planned conversion into a public-benefit corporation, Microsoft is reportedly asking for a larger stake in the new company that would result from that move than OpenAI is willing to give, the report said.

The companies have reportedly also disagreed about whether OpenAI can partner with other cloud providers and whether Microsoft would still have access to OpenAI’s technology after OpenAI says its models have achieved artificial general intelligence (AGI), per the report.

It was reported in May that Microsoft and OpenAI were renegotiating their partnership deal to one in which the software giant would protect its equity stake while ensuring access to future technologies, and OpenAI gets more flexibility, with a possible initial public offering in its future.

During that same month, it was reported that one of the key issues in these discussions was how much equity in a restructured OpenAI Microsoft would get in exchange for the $13 billion-plus it has invested in the startup.

The ongoing negotiations and disputes highlight the complex dynamics between two major players in the AI industry. Both companies have a vested interest in maintaining a productive partnership, but the high stakes involved in intellectual property and equity stakes are causing significant friction. 

Frequently Asked Questions (FAQS): 

Q: What is the main dispute between OpenAI and Microsoft?

A: The main dispute centers on intellectual property and equity stakes, particularly regarding the access to the intellectual property of Windsurf and the size of Microsoft’s share in OpenAI if it converts into a public-benefit corporation.

Q: What is Windsurf, and why is it significant in this dispute?

A: Windsurf is a coding startup that OpenAI is acquiring for $3 billion. The significance lies in the fact that OpenAI does not want Microsoft to have access to Windsurf's intellectual property, as they have competing products for coding.

Q: What is a public-benefit corporation, and why is it relevant to OpenAI?

A: A public-benefit corporation is a type of corporation that is legally required to consider the impact of its decisions on society, not just shareholders. OpenAI is considering converting into such a corporation, which would affect the equity stakes of its partners, including Microsoft.

Q: How much has Microsoft invested in OpenAI?

A: Microsoft has invested over $13 billion in OpenAI, which is a significant stake and a key point of negotiation in their ongoing discussions.

Q: What is artificial general intelligence (AGI), and why is it relevant to the OpenAI-Microsoft partnership?

A: Artificial general intelligence (AGI) refers to AI systems that can understand, learn, and apply knowledge in a way similar to human intelligence. It is relevant because the terms of the OpenAI-Microsoft partnership include discussions about access to technology after OpenAI claims its models have achieved AGI. 

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