OpenAI and Microsoft: The End of the AGI Clause Reshapes Their Alliance

A Historic AGI Clause Between OpenAI and Microsoft

For many years, the partnership between Microsoft and OpenAI has been marked by an unusual clause. This clause stipulated that if artificial general intelligence (AGI) were achieved, Microsoft's commercial intellectual property rights over OpenAI's technology would become void. This clause, which has sparked numerous discussions and speculations, now appears to have come to an end.

Initial Context of the Partnership

On July 22, 2019, as part of a significant investment from Microsoft, OpenAI began producing a series of increasingly powerful AI technologies. These technologies required substantial capital for computing power. Rather than creating a product that would change their direction, OpenAI chose to license some of its pre-AGI technologies, with Microsoft as the preferred partner for commercialization.

OpenAI's Definition of AGI

OpenAI's charter, first published in April 2018, has remained unchanged since at least March 11, 2019. It defines AGI as highly autonomous systems capable of outperforming humans in most economically valuable work. However, signing an agreement with Microsoft that depended on knowing when AGI would be achieved required a more concrete definition.

Evolution of Agreements Between OpenAI and Microsoft

In December 2024, The Information reported that the previously undisclosed agreement between Microsoft and OpenAI stipulated that AGI would only be considered achieved when OpenAI's systems could generate the maximum total profits to which its early investors, including Microsoft, were entitled. These profits were estimated at around $100 billion.

In October 2025, a significant change was introduced to the partnership. From now on, a panel of independent experts would be tasked with determining whether AGI had been achieved. This agreement preserved key elements that had fueled the partnership's success, ensuring that OpenAI remained Microsoft's model partner. Microsoft continued to benefit from exclusive intellectual property rights and exclusivity on the Azure API until AGI was reached. Once AGI was declared by OpenAI, this declaration would need to be verified by a panel of independent experts. Microsoft's intellectual property rights over the research, defined as the confidential methods used in the development of models and systems, would remain until the expert panel verified AGI or until 2030, whichever came first.

Recent Changes and Implications

On February 27, 2026, in a joint statement from OpenAI and Microsoft, it was asserted that the definition of AGI and the processes for determining whether it had been achieved remained unchanged. However, on April 27, 2026, in the next phase of the partnership, it was announced that Microsoft would continue to have a license on OpenAI's intellectual property for models and products until 2032. This license would now be non-exclusive, and Microsoft would no longer pay a revenue share to OpenAI. OpenAI's revenue-sharing payments to Microsoft would continue until 2030, regardless of OpenAI's technological advancements, at the same percentage but subject to a total cap.

Conclusion of the AGI Clause

The statement "regardless of OpenAI's technological advancements" seems to indicate that the AGI clause is now dead. The Verge arrives at the same conclusion: the AGI clause is dead. A notable comment on OpenAI's approach to AGI came from Matt Levine in 2023. He speculated that the investors, although dissatisfied, had no legal recourse, and that OpenAI's new CEO, along with its nonprofit board, had handed them a check for their capped return before returning to the management of OpenAI for the benefit of humanity. According to him, a benevolent and carefully governed artificial superintelligence could truly be beneficial for humanity, swiftly solving all of humanity's problems and ushering in an era of peace and abundance.