OpenAI agrees $38bn cap on Microsoft revenue share, clears path to IPO

TL;DR:

• OpenAI has agreed to cap total revenue shared with Microsoft under their longstanding agreement at $38 billion (£29.5bn), The Information reported, citing a person with knowledge of the arrangement.
• The cap follows last month’s renegotiated contract that opens OpenAI to fresh partnerships with Amazon and Google, and reframes the long-term economics of Microsoft’s roughly $13 billion (£10.1bn) of cumulative investment since 2019.
• The change clears a structural obstacle ahead of an expected OpenAI IPO that some executives have said could happen by the end of this year.

Microsoft confirmed in April that revenue-sharing payments from OpenAI would continue through 2030 at the same agreed percentage, “subject to an overall cap” — Monday’s report puts a specific number on it. Reuters could not independently verify the $38bn figure and neither company has commented publicly.

Why this matters for OpenAI investors

A capped revenue-share is the kind of contractual fix IPO bankers ask for. Without it, prospective public-market investors face the awkward reality that Microsoft retains an indefinite call on a significant share of OpenAI’s growth — a structural overhang priced into any pre-IPO valuation discussion. Capping the share at $38 billion makes OpenAI’s economics cleaner to model and easier to communicate in a prospectus. With the company now valued at roughly $852 billion (£663bn), an IPO at around $1 trillion (£779bn) becomes a more straightforward story.

What it changes for UK enterprises

UK enterprises with Azure/OpenAI dependencies — and that includes most large UK banks, several FTSE-100 retailers, and an increasing share of public-sector tenders — should read this as confirmation that the Microsoft/OpenAI bundling era is ending. With OpenAI free to partner with AWS and Google Cloud, UK procurement teams can now negotiate genuine multi-vendor terms for the same model access, rather than treating Azure as the default. The cost implications are real: cloud-vendor competition on AI workloads should narrow the premium Azure has historically commanded for OpenAI exclusivity.

The Musk lawsuit overlay

The revenue cap lands while OpenAI is mid-trial in Oakland, with Musk seeking $150 billion (£117bn) in damages from OpenAI and Microsoft to be paid to the non-profit foundation, plus the removal of Altman and Brockman. A clean revenue-share cap helps the IPO narrative but does not address the corporate-structure questions Musk’s case is built on; if the jury finds substantively for Musk, even the capped Microsoft economics will need to be revisited in the public offering documents.

Looking forward

Watch for movement on two fronts in the next quarter. First, whether OpenAI announces a parallel Amazon or Google partnership — that would be the visible payoff of the contract renegotiation. Second, whether the IPO timeline holds. With closing arguments in the Musk trial on Thursday and a jury verdict to follow, OpenAI’s roadshow window is narrowing. UK pension funds and discretionary mandates with pre-IPO allocations should expect more clarity — or further delay — by the end of June.