Unraveling the Battle Over AI Leadership
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We have some big news that Microsoft and OpenAI may currently be negotiating their partnership or renegotiating because this is something that's been going on for a while. And there's a ton of drama in this negotiation. The actual current cutoff for when this negotiation starts

for when the current partnership ends has been set. And so if they want to continue working together, there's a whole bunch of things that need to get ironed out and fixed. It's going to be a crazy episode. But before we get into that, I wanted to mention that my own startup AI Box has officially launched. We have our beta for our very first product, which is the AI Box Playground. So on the Playground, you have access to dozens of different AI models, all of the top AI models from DeepSeek, Google, Meta, Microsoft, NVIDIA, OpenAI,

XAI. We have all of the image, the top image generators. We have Ideogram and OpenAI and Black Forest Labs. And the cool thing about the platform is that you essentially are able to chat with all of the different AI models on one platform and you can switch between what model you use in there. So we have something called AI Box Default, which if you ask it a question or a prompt, it will determine what the best AI model is to answer that question.

And in addition to that, you have tons of other models that you can use. The other cool thing is you have a button called rerun chat. So if you ask it a question or, you know, an AI model, let's say you're chatting with Claude, it gives you a question to an answer. And you're like, ah, you know, I wish the tone was a little bit better. You can go ask ChatGPT, you can go ask Gemini, you can go ask XAI. And you can compare the responses.

responses side by side. So if you like one answer better than the other, you can go compare them side by side and you see all sorts of funny things. For example, I just asked it to tell me a joke and you get very similar jokes, but you know, you can, you can rate the jokes between anthropic and open AI against each other. We're actually find this very useful is we have audio. So we have 11 labs in the software and

So if you want to go and chat with or, you know, get it to create some audio, like an audio file for you, I'll often go to 11 labs and they have different voices. So I'll test out multiple voices and compare them side by side. All sorts of cool stuff. Anyways, the link is in the description. You can check it out. Let's talk about what is happening over at Microsoft.

So what's interesting with this negotiation here is that Microsoft has put in about, according to the Financial Times, they've put in about $13 billion into OpenAI so far. So they're definitely pretty much the key shareholder. And they are essentially the key holdout right now that OpenAI needs to approve a restructuring program plan that they have in place. So

What's interesting is OpenAI really is in a pretty tough negotiating spot. Microsoft is their biggest investor, their biggest partner. You know, what's interesting about Microsoft is OpenAI, I think, is doing great on their own. They're really crushing it. But Microsoft really is a big distribution platform for them because OpenAI is embedded into everything to do with Microsoft Copilot and all of their platforms.

And so when they report their numbers, when they report their usage, and then when they report their revenue, a huge chunk of that is Microsoft. And so OpenAI looks like they've run away with the whole market, but it's really like Microsoft and OpenAI in a big way. So they both need each other. It's a very symbiotic but also turbulent relationship.

OpenAI, of course, just made some huge announcements recently where they essentially said that they're going to reverse course. Their nonprofit is going to essentially remain control of all of their business operations. They're not going to switch to a for-profit company per se, although there's some interesting things that are still happening. But with all of that happening, the nonprofit board is still going to control the entire company. So

They have kind of this interesting bit of corporate restructuring they're trying to do. They're trying to still convert their business arm into a for-profit, but they're calling it a public benefit corporation or a PBN. And this is the same type of corporation that Elon Musk's XAI is. And there's a bunch of other ones that have done this. I think Cohere maybe. But essentially, this PBN, it's

It's a for-profit company, but it's called the Public Benefit Corporation. It just sounds better pretty much, but it's still a for-profit company and it makes it a lot easier to raise money. It makes it easier for them to give equity to Microsoft, for example. And of course, the nonprofit board is still going to remain in control of everything.

Now, we get to the deal as it sits today. Microsoft has put in $13 billion. They are the key, they're the biggest shareholder and they're the key holdout. So OpenAI needs Microsoft to approve this deal. OpenAI needs to essentially be able to convert to this public benefit corporation so they can raise more money and do a lot of things, especially when it comes to infrastructure and a lot of stuff they want to do there.

So, they need to do it, but Microsoft is not giving the approval yet. They're holding out and the reason why, because I guess the tricky part of this whole negotiation is Microsoft wants more equity. So, Microsoft's talking about how much equity they're actually going to get for all of this. And that's exactly, I think, the biggest thing that's kind of holding this back.

So both of them are negotiating right now, and they're also negotiating a bit of a broader contract. So Microsoft wants more equity. But in addition, Microsoft is actually willing to give up some of their equity if

And this is the big thing. If open AI will allow them to continue to have access to the technology that they're developing, all of their AI models after 2030. So 2030 is the current cutoff. And so it's interesting because on the one hand, Microsoft's like, hey, you know, if you want to do this, we would like a little bit more equity if you want to switch to a for-profit. So we want some more equity, the for-profit, but we're actually willing to give up equity if you're going to extend like our quote unquote lease, or if you're going to extend our ability to access and use your technology beyond 2030. So

A very interesting situation that OpenAI and Microsoft are in. There's a bunch of sources I've been talking to the Financial Times, and they said that the negotiations are very complicated, but they're even more complicated by the relationship between these two companies because it's actually getting more competitive. OpenAI, you know, I recently reported on the fact that OpenAI, like their enterprise business

owners, which are business customers, which are directly competing with Microsoft, have jumped a ton just from last month in January, or just from the beginning of the year in January. They went from about 28% sales

Um, sorry, they went from, they went to about 32% of all business customers have a subscription to OpenAI. And these aren't just like users. These are business customers on an enterprise plan, uh, with OpenAI. And that's, I think like a, almost a 10% jump from the beginning of the year when it was at 20 something percent. So, um, we're seeing some really big growth there and this is exactly what Microsoft, uh,

competing for, right? Microsoft wants the enterprise customers. That's why they brought OpenAI in. That's why they have them embedded into all of their software. And so if OpenAI is able to essentially get, you know, on subscriptions to all of the enterprise customers, they can release more products that directly compete with Microsoft. There's all sorts of ways that it could hurt them. And the big one is just Microsoft wants everyone, all business...

all enterprise customers using AI to go through them through Microsoft's Azure cloud. There's a lot of things that Microsoft wants to lock them in the ecosystem as people are moving out of the ecosystem and going just directly to open AI. It's, you know, getting a little competitive. So,

There's also, of course, the super ambitious Stargate infrastructure project that OpenAI announced and is trying to work on. On April 17th, there was a big report that said they were looking at international expansion for the Stargate project. So it's a $500 billion project that SoftBank and OpenAI

Open AI and Oracle are all working on. They went and announced it at the White House with President Trump. And so, you know, this huge $500 billion thing that had a lot of wow factor for people. But then in April last month, they said, actually, guess what? We are looking to go international with this. So beyond the $500 billion, we want every country to have kind of their own Stargate project. So there's a lot of big things that Open AI has in the pipe, but all of this hinges on the fact that Microsoft...

doesn't want to let them convert their corporate structure to a for-profit, which would allow them to be able to do a lot of this stuff without some concession. So the negotiations are tight. I'll keep you up to date on everything going on with Microsoft and OpenAI. Fascinating relationship to say the least. Make sure that if you're interested in trying out all the latest models from Microsoft, OpenAI, Anthropic,

cohere every other AI company, you check out AIbox.ai. My own startup, it's $20 a month. You get access to every AI company, all the top AI companies, and you don't have to pay subscriptions for the top 20. We have audio, we have image, and we have text, all in the same chat. A lot of cool features. You can go check it out. Thanks so much for tuning into the podcast, and I will catch you next time.