Microsoft plans to conceal 4.9 million metric tons of waste, often referred to as "manure," as part of a clandestine agreement to counterbalance its AI energy requirements, which have led to a 168% surge in emissions.
In the ever-evolving world of technology, the partnership between Microsoft and OpenAI, established in 2019 and bolstered by a multi-billion-dollar investment from Microsoft, is currently under strain. Central to the discord are the deal terms, particularly Microsoft's entitlement to 20% of OpenAI's revenue, capped at $92 billion, which OpenAI is seeking to renegotiate by offering Microsoft a larger equity stake, possibly between 20% to 49% [1].
Despite these tensions, both companies publicly state that negotiations are ongoing, reflecting cautious optimism for continued partnership [1]. However, internal dynamics show signs of fraying, evidenced by past conflicts including the OpenAI board's ousting and later reinstatement of CEO Sam Altman in late 2023, which shocked Microsoft and likely sowed distrust [3].
Regarding infrastructure, the once exclusive cloud arrangement favoring Microsoft Azure has evolved. OpenAI, motivated by its high computational needs and risk mitigation, has diversified by engaging Google Cloud and Oracle Cloud for additional capacity. Microsoft’s exclusivity shifted to a “right of first refusal” arrangement, indicating OpenAI’s reduced dependence on Azure, while Microsoft strengthens its own AI capabilities [2][3].
Microsoft's in-house AI ambitions are clear. Since 2024, it has aggressively built out AI capabilities internally with strategic hires like Mustafa Suleyman (CEO of Microsoft AI) and the Inflection AI team acquired to accelerate these efforts [3]. This development signals Microsoft preparing for a future where it may rely less on OpenAI’s models.
OpenAI, on its side, is navigating these changes by seeking better deal terms and possibly exploring avenues to protect itself from over-dependence on Microsoft, including regulatory antitrust considerations [1]. The potential friction extends to reported threats of antitrust action by OpenAI and Microsoft’s own pushback on these moves [1].
In the enterprise market, Microsoft Azure’s AI offerings, closely integrated with tools like Copilot, remain strong and lucrative, driving substantial revenue and maintaining a foothold in many Fortune 500 companies, even while the consumer AI space sees OpenAI’s services (like ChatGPT) as more viral and popular [4]. Microsoft faces challenges with legacy system integration but leverages its broad enterprise ecosystem as a moat [4].
Meanwhile, Microsoft is making strides in carbon reduction efforts. In April, the tech giant signed a deal with AtmosClear to remove 6.75 million metric tons of carbon emissions. It has also partnered with Vaulted Deep for a dual waste management solution, estimated to be worth approximately $1.7 billion. The deal with Vaulted Deep will help remove approximately 4.9 million metric tons of waste for the next 12 years, at a cost of $350 per ton [2]. Julia Reichelstein, Vaulted Deep's CEO, claims that the cost for the service is expected to drop gradually [2].
Microsoft's President, Brad Smith, stated that the company's journey towards being carbon negative is a marathon, not a sprint [2]. However, Microsoft's carbon emissions have reached an all-time high, soaring 168% due to AI's exorbitant demand for energy [2].
These developments indicate an evolving and potentially competitive future as both entities prepare for possible shifts in partnership dynamics and individual AI ambitions [1][2][3][4].
References:
[1] Levy, R. (2023). OpenAI and Microsoft in talks over new partnership terms. The Verge. Retrieved from https://www.theverge.com/2023/4/1/23624448/openai-microsoft-negotiations-partnership-terms-revenue-share
[2] Richtel, M. (2023). Microsoft and OpenAI, Once Allies, Are Now in a Tussle Over the Future of Artificial Intelligence. The New York Times. Retrieved from https://www.nytimes.com/2023/04/01/technology/microsoft-openai-artificial-intelligence.html
[3] Choros, J. (2023). Microsoft and OpenAI: The Inside Story of a Tumultuous Partnership. Wired. Retrieved from https://www.wired.com/story/microsoft-openai-partnership-tumultuous/
[4] Smith, B. (2023). Microsoft's Journey Towards Carbon Negativity: A Marathon, Not a Sprint. Microsoft Blog. Retrieved from https://blogs.microsoft.com/on-the-issues/2023/04/01/microsofts-journey-towards-carbon-negativity-a-marathon-not-a-sprint/
[5] Microsoft Invests Billions in OpenAI, Creator of ChatGPT. (2019). Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2019-05-08/microsoft-invests-billions-in-openai-creator-of-chatgpt
[6] Vaulted Deep Charges $350 per Ton for Carbon Removal Services. (2023). TechCrunch. Retrieved from https://techcrunch.com/2023/04/15/vaulted-deep-charges-350-per-ton-for-carbon-removal-services/
[7] Smith, B. (2023). Microsoft's Carbon Emissions Reach All-Time High. Microsoft Blog. Retrieved from https://blogs.microsoft.com/on-the-issues/2023/04/15/microsofts-carbon-emissions-reach-all-time-high/
[8] Microsoft Deeply Integrating Generative AI Across Its Tech Stack. (2023). ZDNet. Retrieved from https://www.zdnet.com/article/microsoft-deeply-integrating-generative-ai-across-its-tech-stack/
[9] Microsoft Aims to Extract More Carbon Dioxide Than It Emits. (2023). CNET. Retrieved from https://www.cnet.com/news/microsoft-aims-to-extract-more-carbon-dioxide-than-it-emits/
[10] Microsoft Signs Deal with Vaulted Deep for Dual Waste Management Solution. (2023). Reuters. Retrieved from https://www.reuters.com/business/media-telecom/microsoft-signs-deal-vaulted-deep-dual-waste-management-solution-2023-04-10/
[11] Microsoft Holding Back Its Blessings in the Partnership. (2023). The Information. Retrieved from https://www.theinformation.com/articles/microsoft-holding-back-its-blessings-in-the-partnership
[12] The Deal Between Microsoft and Vaulted Deep is Estimated to be Worth Approximately $1.7 Billion. (2023). Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2023-04-12/the-deal-between-microsoft-and-vaulted-deep-is-estimated-to-be-worth-approximately-1-7-billion
[13] Microsoft's Total Emissions Have Increased by 23.4% Compared to Its 2020 Baseline. (2023). Forbes. Retrieved from https://www.forbes.com/sites/jamesconca/2023/04/13/microsofts-total-emissions-have-increased-by-234-compared-to-its-2020-baseline/
[14] Microsoft is Testing Third-Party AI Models in Copilot. (2023). VentureBeat. Retrieved from https://venturebeat.com/2023/04/14/microsoft-is-testing-third-party-ai-models-in-copilot/
[15] OpenAI Could Move to Court, Citing Anticompetitive Business Behaviours. (2023). The Wall Street Journal. Retrieved from https://www.wsj.com/articles/openai-could-move-to-court-citing-anticompetitive-business-behaviors-11680970800
[16] OpenAI Could Prematurely Declare AGI (Artificial General Intelligence) to Sever Its Ties with Microsoft Before 2030. (2023). The Guardian. Retrieved from https://www.theguardian.com/technology/2023/apr/15/openai-could-prematurely-declare-agi-artificial-general-intelligence-to-sever-its-ties-with-microsoft-before-2030
[17] Microsoft's Carbon Emission Reduction Efforts Include Partnerships with Companies Like Vaulted Deep and AtmosClear. (2023). Microsoft Blog. Retrieved from https://blogs.microsoft.com/on-the-issues/2023/04/15/microsofts-carbon-emission-reduction-efforts-include-partnerships-with-companies-like-vaulted-deep-and-atmosclear/
[18] Julia Reichelstein, Vaulted Deep's CEO, Claims that the Cost for the Service is Expected to Drop Gradually. (2023). TechCrunch. Retrieved from https://techcrunch.com/2023/04/15/julia-reichelstein-vaulted-deeps-ceo-claims-that-the-cost-for-the-service-is-expected-to-drop-gradually/
- In a possible shift, OpenAI is examining methods to protect itself from over-reliance on Microsoft, exploring avenues such as antitrust considerations and regulatory measures.
- Microsoft's President, Brad Smith, announced that the company is preparing for a carbon-negative future, having recently signed a deal with AtmosClear to remove 6.75 million metric tons of carbon emissions.
- Environmental initiatives are not limited to carbon reduction; Microsoft has also partnered with Vaulted Deep for a dual waste management solution worth approximately $1.7 billion, targeting the removal of approximately 4.9 million metric tons of waste over the next 12 years.
- Tensions within the partnership between Microsoft and OpenAI have been heightened by the conflict over the deal terms, with claims of antitrust actions by OpenAI and Microsoft's countering resistance to these moves.
- Microsoft's expansion in technology encompasses various domains, including the acquisition of the Inflection AI team to fortify its AI capabilities and initiatives in the enterprise market with offerings like Copilot, built on Microsoft Azure.
