Microsoft will lose exclusive rights to the OpenAI IP as the new deal increases revenue sharing.

Microsoft and OpenAI have renewed their partnership, with Microsoft withdrawing its exclusive license to OpenAI models and products, and securing their relationship on a share of revenue from OpenAI to Microsoft.

The new agreement keeps Microsoft with OpenAI technology until 2032, but changes the structure of that access. Although the license is no longer exclusive, Microsoft will continue to provide OpenAI IP for models and products, giving OpenAI greater flexibility to distribute and promote its technology beyond the Microsoft ecosystem.

Income terms have also changed. Microsoft will no longer pay a revenue share to OpenAI, but OpenAI will continue to make revenue share payments to Microsoft at the same percentage as before through 2030, now subject to an aggregate cap.

The announcement initially hit Microsoft shares, which fell more than 4% when the news broke and the new deal was announced. In midday trading, however, the stock recovered and traded flat on the day, suggesting investors were weighing the downside of Microsoft's continued access to OpenAI technology and its position as a major shareholder.

Microsoft remains OpenAI's primary cloud partner, and OpenAI products will still be shipped on Azure unless Microsoft is unable to support the required capabilities. But OpenAI can now deliver products to customers on any cloud provider, marking a big shift from a partnership built around Microsoft's unique access and infrastructure advantages.