Greetings,

This week, my attention was immediately drawn to the escalating tensions between Microsoft and OpenAI, a partnership that once seemed like an unstoppable force in the AI world. This isn't just about two tech giants; it's about the very definition of artificial general intelligence and who controls its future. The idea that a single clause, once considered a fantasy, could now derail the industry's most important collaboration is a testament to how quickly the AI landscape is evolving.

Why it caught my eye:

• The core of the conflict lies in the "artificial general intelligence" (AGI) clause, a provision in their 2019 agreement that allows OpenAI to cut off Microsoft's access if its AI reaches a point where it can "outsmart humans".
• The differing views on AGI are striking: OpenAI CEO Sam Altman believes they are on the verge of achieving it, while Microsoft CEO Satya Nadella dismisses this as "nonsensical benchmark hacking".
• The article also reveals OpenAI's moves to diversify its cloud partnerships beyond Microsoft, striking a deal with Oracle and even turning to Google Cloud for specialized servers.

This deep dive into the Microsoft-OpenAI saga is a must-read, offering a rare glimpse into the intense negotiations and clashing ambitions that are shaping the future of AI.

Best,

Jessica Lessin
Founder & Editor-in-Chief

OpenAI and Microsoft Duel Over AGI in High-Stakes Negotiation

For the past three years, Microsoft has introduced a slew of new software tools, such as Copilot, by drawing on artificial intelligence developed by OpenAI. Under the terms of the software giant's financial backing for OpenAI, Microsoft has access to the tech through 2030. The only risk was that OpenAI could move to cut off access if its board decided the AI had developed to the point where it could outsmart humans.

Back in 2019, when the deal was first negotiated, Microsoft executives didn't have many reservations about that provision. Industry insiders regarded the idea that AI could get to that point—known as artificial general intelligence or AGI—as a fantasy.

"Everyone laughed at this," said a person involved in the contract talks.