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Comment by aurareturn | Hacker News Reader

  Microsoft Corp. will no longer pay revenue to OpenAI and said its partnership with the leading artificial intelligence firm will not be exclusive going forward.

What does this mean that Microsoft will no longer pay revenue to OpenAI? How did the original deal work?

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Wonder if this means Microsoft is actually going to be deploying Claude Code internally for usage?

That might help fix some of the bugs in Teams... :)

It's unclear. That was never disclosed. It's similarly unclear what it means that they will no longer pay revenue share to OpenAI. Do they get the models for free now? How does OpenAI make money from the models hosted on Azure if not via revenue share?

They were paying them 20% of the revenue from the hosted OpenAI products I believe?

Does this mean they will host OpenAI products but not pay them? Or does it mean they are paying them in some other way?

I suppose continue to host until the 2030/32 that they have access to but not share revenues when they use those models for their products like the bazillions of Copilots.

It seems that the old deal was exclusivity to MSFT with revenue share, and now no exclusivity, no revenue share.

Bear in mind that MSFT have rights to OpenAI IP (as well as owning ~30% of them). The only reason they were giving revenue share was in return for exclusivity.

This is a really common way to structure exclusivity; we did the same thing whenever customers requested it (and we couldn’t get rid of it entirely). Charge for the exclusivity explicitly.

If they wanted named exclusivity rather than general exclusivity, we would charge a somewhat smaller amount for each competitor they wanted exclusivity from. They could give up exclusivity at any time.

That was precisely how we structured our deal with Azure, back in 2014-2016 or so.

Azure was the only non-OpenAI provider that was allowed to provide OpenAI models. The comparison here is with Anthropic whose models are on both GCP and AWS (and technically also Azure though I think that might just be billing passthrough to Anthropic).

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