OpenAI has received just a fraction of Microsoft’s $10 billion investment

Only a fraction of Microsoft’s $10 billion investment in OpenAI has been wired to the startup, while a significant portion of the funding, divided into tranches, is in the form of cloud compute purchases instead of cash, according to people familiar with their agreement.

That gives the software giant significant leverage as it sorts through the fallout from the ouster of OpenAI CEO Sam Altman. The firm’s board said on Friday that it had lost confidence in his ability to lead, without giving additional details.

One person familiar with the matter said Microsoft CEO Satya Nadella believes OpenAI’s directors mishandled Altman’s firing and the action has destabilized a key partner for the company. It’s unclear if OpenAI, which has been racking up expenses as it goes on a hiring spree and pours resources into technological developments, violated its contract with Microsoft by suddenly ousting Altman.

Microsoft has certain rights to OpenAI’s intellectual property so if their relationship were to break down, Microsoft would still be able to run OpenAI’s current models on its servers.

Microsoft and OpenAI declined to comment.

Over the past year, Microsoft has made OpenAI’s products such a key part of its offerings, from Windows to Microsoft Office to GitHub, that anything involving that underlying technology has material impact on the $2.75 trillion company’s bottom line.

Still, with Microsoft’s massive compute resources, the company would likely be able to attract talent and train AI models on its own. Currently, part of the investment in OpenAI gives the startup access to Microsoft’s servers.

Since Friday, Silicon Valley has been buzzing about what could happen to their partnership, including whether Microsoft and other OpenAI investors might attempt to reinstate Altman as CEO.

On Saturday in a note to employees, OpenAI Chief Operating Officer Brad Lightcap said the company’s leaders “still share your concerns about how the process has been handled, and are working to resolve the situation,” according to an internal memo reviewed by Semafor.

Lightcap shared new insight into the board’s decision, clarifying that there was no “malfeasance or anything related to our financial, business, safety, or security/privacy practices.”

That struck a different tone than the board’s statement on Friday that said Altman was “not consistently candid” with directors. Instead, Lightcap characterized it as a “breakdown in communication” between Altman and the board and added that the leadership has full faith in interim CEO Mira Murati.

His full statement is here:

Team - After yesterday’s announcement, which took us all by surprise, we have had multiple conversations with the board to try to better understand the reasons and process behind their decision. These discussions, and options regarding our path forward, are ongoing this morning.

We can say definitively that the board’s decision was not made in response to malfeasance or anything related to our financial, business, safety, or security/privacy practices. This was a breakdown in communication between Sam and the board. Our position as a company remains extremely strong, and Microsoft remains fully committed to our partnership.

Mira has our full support as CEO. We still share your concerns about how the process has been handled, are working to resolve the situation, and will provide updates as we’re able.

I’m sure you all are feeling confusion, sadness, and perhaps some fear. We are fully focused on handling this, pushing toward resolution and clarity, and getting back to work. Our collective responsibility right now is to our teammates, partners, users, customers, and the broader world who shares our vision of broadly beneficial AGI. Hang in there, we are behind you all 1000%.