The Microsoft-OpenAI partnership — the biggest commercial deal in AI — broke because OpenAI wanted to move into the enterprise software business Microsoft considered its own, and because Microsoft used its compute and IP control to constrain OpenAI, whose growth needed far more of everything.
Cantz recounts the collapse of the biggest commercial partnership in AI: the deal assumed OpenAI builds the brain and Microsoft monetizes the enterprise. When OpenAI saw Anthropic's enterprise success and moved in itself (Codex), the conflict was set. Add Microsoft's 27% stake, IP rights to 2032, and control over OpenAI's compute, and the relationship disintegrated — with OpenAI now suing Apple and Microsoft struggling after losing its exclusive AI engine. ✦ AI generated
Alex Cantz · The Compound · 2026-07-31 · original ↗
starts at this moment · 38:31
“They were an equity investor in OpenAI. They reuped a few times and the idea was that OpenAI would power all of Microsoft's AI apps. That's now over. Why is it over? Um, and what does it mean for OpenAI? What does it mean for Microsoft?”
Well, OpenAI, as you may know, has a problem holding on to partnerships. Yes. Uh, you remember two years ago they partnered with Apple to be the AI behind uh Siri. Now they're out. Now they're being sued by Apple for stealing Apple's road mapap and service of device into the arms of Google and that happened with Disney correct and then the right with Sora and that went away um and so here we have Microsoft so so this was a big this was the biggest commercial partnership in all of AI this this linkage between Microsoft and and OpenAI was a huge deal so so a couple of things happened. So first of all, I think the deal was always with Microsoft. Satya Nadella basically saw open AI and said you build AI or you build artificial general intelligence AI on human level intelligence a human level intelligence capability plane. Um you go build the sort of brain, you take consumer, so you do monetize it and we'll do enterprise. Right. And that was everything was hunky dory. They were the best friends in the world. And then OpenAI said, 'Oh, Anthropic's doing enterprise and that's really working and we're going to do enterprise.' So then OpenAI started to move to enterprise. And by the way, it's not a coincidence that after open AI moved to enterprise, up until today, Microsoft has been uh struggling very much this year. So Open AAI is big big push. And my understanding is they did not like the constraints that Microsoft was putting on them. Remember, Microsoft owns 27% of Open AAI. Microsoft has access to OpenAI IP till 2032. And Microsoft by being like the sole provider for OpenAI on cloud uh sort of got to determine how much compute OpenAI could use and OpenAI needed way more compute than they wanted.
verbatim transcript · starts at 38:31
38:12They reuped a few times and the idea was that OpenAI would power all of Microsoft's AI apps. That's now over. Why is it over? Um, and what does it mean for OpenAI? What does it mean for Microsoft? >> Well, OpenAI, as you may know, has a problem holding on to partnerships. >> Yes. >> Uh, you remember two years ago they partnered with Apple to be the AI behind
38:37uh Siri. Now they're out. Now they're being sued by they're out well there there's you can still access chatpt and Siri but they are now being sued by Apple for stealing Apple's road mapap and service of device >> into the arms of Google and that happened with Disney >> correct and then the right with Sora and that went away um and so here we have Microsoft so so
38:57>> this was a big this was the biggest commercial partnership in all of AI this this linkage between Microsoft and and OpenAI was a huge deal >> so so a couple of things happened. So first of all, I think the deal was always with Microsoft. Satya Nadella basically saw open AI and said you build AI or you build artificial general intelligence AI on human level intelligence a human level intelligence
39:22capability plane. Um you go build the sort of brain, you take consumer, so you do monetize it >> and we'll do enterprise, >> right? >> And that was everything was hunky dory. They were the best friends in the world. And then OpenAI said, "Oh, Anthropic's doing enterprise and that's really working and we're going to do enterprise." So then OpenAI started to move to enterprise. And by the way, it's
39:45not a coincidence that after open AI moved to enterprise, up until today, Microsoft has been uh struggling very much this year. So Open AAI is big big push. >> What was the move to enterprise? Codeex. >> It's Codeex. Yeah, it's Codex. It's also just like working with companies to make sure that the that the um the tools will will work for them. >> What does this mean for what does this
40:06mean now for Microsoft? They are going to be in a situation where now you can kind of bring your own LLM. You're not just using chat GBT or OpenAI products. >> Correct. So, so as this was happening, OpenAI also was growing a lot. >> Yeah. >> And my understanding is they did not like the constraints that Microsoft was putting on them. Remember, Microsoft owns 27% of Open AAI. Microsoft has
40:32access to OpenAI IP till 2032. And Microsoft by being like the sole provider for OpenAI on cloud uh sort of got to determine how much compute OpenAI could use >> and OpenAI needed way more compute than they wanted. >> Meanwhile, like so, so you know what did you get for that? If you were Microsoft, you got like, okay, exclusive access to OpenAI models through Azure, but you
40:56also had this clause in the contract that if OpenAI were to say, hey, we've hit AGI or artificial general intelligence, AI on par with human level intelligence, then you would lose your right to make money off of that. Okay, >> this was a complete mess. crazy and even Sam Sam Alman opening II CEO this week has talked about how one of the things that he's done wrong and I think we