Will OpenAI Bite the Microsoft Hand That Feeds?

There have been a lot of divisive companies in the history of technology. Even just in recent years, Uber, WeWork, Tesla, and Twitter all immediately jump to mind. But OpenAI is quickly catching up, with each week bringing a spate of new headlines casting the company in both positive and negative light. Just this week, the board and former board are arguing in the Op-Ed pages of The Economist while talk begins to swirl around the upcoming GPT-5 model and OpenAI’s new safety and security committee, put in place following the exit of those previously tasked with keeping such things aligned within the company. And then there are the rumors of dealings with two of the oldest rivals in tech: Microsoft and Apple.

Both The Information and The Financial Times have reports in the past couple of days pointing to potential tension between these sides as OpenAI apparently gets ready to be unveiled as a partner on Apple’s new AI efforts. OpenAI’s main benefactor, Microsoft, perhaps doesn’t like this too much as everyone increasingly seems on an AI collision course.

Let’s take a step back with a quick recap of how we got to where we are:

Microsoft has given OpenAI something to the tune of $13B,¹ and counting, to help create ChatGPT and their various other efforts. OpenAI, in turn, has given Microsoft the right to use their technology to underpin and upsell their own customers on AI. When the shit hit the fan at OpenAI leading to the ouster of Sam Altman, Microsoft was the key partner who stepped in to put Altman back in place. At the same time, this pointed to some real risk in their investment in what was still structured as a non-profit company. And so it seemed like Microsoft started making moves to hedge their bet, both investing in other AI startups, but also totally not acquiring one. That deal put in place a new leadership team for Microsoft’s AI efforts, notably in the consumer space, potentially going head-to-head with their partner in OpenAI. Meanwhile, OpenAI was cutting their own deals with various other entities on the side, leading up to this apparent Apple deal which would presumably make it even harder for Microsoft to compete in consumer AI. But hey, at least Microsoft would have another cloud customer in the form of… Apple, by way of ChatGPT. Unless, of course, Apple insists on running OpenAI tech on their own servers, if that’s even possible. It’s all just insanely incestuous and messy and getting messier each day. Might we see Apple invest in OpenAI soon? I mean, definitely don’t be surprised!

Anyway, all of this underscores the whispers you can’t help but hear if you follow any of this: that OpenAI and Microsoft are increasingly at odds with one another. Yes, they’ll still say the right things in public, and even make the occasional public appearance in support of one another. But there are billions of reasons to do that, literally. At the same time, the more subtle signals point to partners at odds. And a rift growing between the two.

All of that leads to the obvious question: if OpenAI is about to bite the hand that feeds them? And what, if anything, Microsoft can do if bitten?

It’s a pretty strange state of affairs given that it was just six months ago that Satya Nadella seemingly moved heaven and Earth to get Altman back in place at OpenAI. But once the Inflection deal, sorry, totally not a deal, happened, it signaled a fairly significant change in the relationship. Most people you talk to think this was a huge mistake on Microsoft’s part. Not just pissing off Altman and OpenAI, but also betting on Mustafa Suleyman to lead their group — himself a divisive figure in his own right with questionable bonafides. But hey, at least they got access to Inflection’s massive NVIDIA cluster, right?

Cluster Begat Clusterfuck

From the get-go of the partnership, the talk had been that OpenAI might be content to simply let Microsoft take ChatGPT and the other products that were made along the path to AGI. That AGI was the only real goal and Altman and team had some sense of how much money, data, and compute it would take to get there, and so the non-profit went for broke and the for-profit was born. The soul, essentially, was sold.

But what you increasingly hear now is that AGI might be nowhere near reality and in fact, may never be. This isn’t helped by the fact that no one has an actual definition of the mythical technology, but instead it gets sort of the porn-y vague “you’ll know it when you see it” hand waves more and more.

While AGI is still getting lip service from OpenAI, I believe you’re going to increasingly see the focus more on regular old non-AGI product development. Like GPT-4o, which sounds like Scarlett Johansson, quite literally, brilliant. Altman’s brief comments upon the announcement — no, not “her” — almost seems to indicate as much. And whatever they’re about to do with Apple may be the logical next step down that path.

Said another way, OpenAI can keep saying they’re going down the path to AGI without actually doing it. That’s perhaps unfair, as they, like most AI companies, still would love to stumble upon such a creation. But I’m just not sure how realistic of a goal it is anymore as the importance of AI minus the “G” comes more and more into focus. To say that another way, I think OpenAI can still be one of the most important companies in the world without creating AGI. And I think they may have come to this realization as well.

But that leaves the relationship with Microsoft in an even more precarious place. In a normal world, Microsoft would just acquire the company outright. But we don’t live in a normal world and they can’t do that. And so they have to continue to partner with a partner with which they’re increasingly at odds. While that partner also partners with other partners which will put the two sides even more at odds. It’s all quite odd.²

All I know is that if the above is even just directionally accurate, several other players would be more than happy to see it. None more so than the just-raised-$6B xAI, led by that other co-founder of OpenAI who is now more than a little at odds with the company. To the tune of lawsuits. Lawsuits which probably aren’t going anywhere — but may oddly make a jury define AGI? — but are almost worse in a way because they’re yet another distraction.

It’s really sort of incredible how well OpenAI has performed recently given all the distractions. But at some point they will certainly add up. OpenAI will not be happy if that’s the case. But will Microsoft?

¹ Yes, yes, a large portion of that is in the form of compute credits and resources. ↩

² Have I mentioned that OpenAI launched GPT-4o as a native Mac app first? Awkward... ↩