Stargate Deal Shows Microsoft Drifting Further From OpenAI

Microsoft's absence from OpenAI's Stargate announcement this week follows months of tension between the companies and signals a new era in which the longtime partners will be less reliant on each other.

- TOM DOTAN AND DEEPA SEETHARAMAN

At a White House news conference on Tuesday, the ChatGPT maker announced Stargate, a venture with Oracle and tech investor SoftBank. The new company plans to spend up to $500 billion building new data centers in the U.S. to help power OpenAI's development.

The assembled leaders-OpenAI's Sam Altman, Oracle's Larry Ellison, SoftBank's Masayoshi Son and President Trump-discussed how AI could create jobs and even cure cancer. Microsoft Chief Executive Officer Satya Nadella was thousands of miles away, at the World Economic Forum in Davos, Switzerland.

The developments show how the OpenAI-Microsoft partnership that helped trigger the generative-AI boom is drifting apart as each company focuses on its own evolving needs.

In recent months, the two sides had been haggling over what to do about OpenAI's seemingly insatiable appetite for computing power and its contention Microsoft couldn't fulfill it even though their agreement didn't allow OpenAI to easily switch to others, people familiar with the discussions said.

OpenAI is almost entirely reliant on Microsoft to provide it Please with the data centers it needs to build and operate its sophisticated AI software. That has been part of their agreement since Microsoft first invested in 2019. With the success of Chat GPT, OpenAI's need for computing power surged. Its executives have said ending the exclusive cloud contract could be crucial to compete with rival AI developers that don't have the same constraints.