Satya Nadella says he’s ready to “exploit” the new OpenAI deal

Microsoft CEO Satya Nadella was asked by a Wall Street analyst on Wednesday how the revised OpenAI partnership would impact Microsoft’s financials.

He said the new agreement was a good deal for everyone. “We feel good about our partnership with OpenAI. I’m always very focused on any partnership and ensuring there’s a win-win build at all times. I mean, that’s how you can remain a good partner.”

He stressed that Microsoft retained access to OpenAI’s intellectual property — including its models and agents’ products — but no longer had to pay OpenAI for them.

Referring to royalty-free access to OpenAI’s most advanced AI until 2032, Nadella said: “We have a frontier model, with all the intellectual property rights that we will have access to until 1932 and we fully plan to exploit it.”

There has certainly been a lot of speculation that the new deal, in which Microsoft will no longer have exclusive access to OpenAI technology, will cause the software giant to lose its edge in AI. OpenAI immediately announced exclusive AI products with Microsoft’s largest cloud competitor, Amazon (while also interviewing Sam Altman and AWS CEO Mark Garman about their collaboration).

But Nadella dismissed these concerns. When Microsoft reported earnings on Wednesday — its last full quarter under the previous deal — the company reported that its AI business exceeded an annual revenue run rate of $37 billion, up 123% year over year.

On this point, Nadella noted that Microsoft raises money from OpenAI in other ways. “They’re some of our big customers, not just on the AI ​​accelerator side, but on all other aspects of computing. So we want to serve them well. And then, of course, we have our equity.”

This refers to OpenAI’s commitment to purchase cloud services from Microsoft worth more than $250 billion, and Microsoft’s 27% stake in OpenAI.

Finally, Nadella emphasized that companies often want to use multiple models of AI, so the relative importance of OpenAI in the industry, especially for enterprises, is not as advanced as it once was.

“We offer the broadest selection of models of any hyperscaler, so customers can choose the right model for the right workload across OpenAI, Anthropic, open source, and more. More than 10,000 customers have used more than one model,” he said.

Time will tell if this deal is truly a win-win. Meanwhile, Microsoft continues to see cloud growth and profits.