After pouring over $13.5 billion into OpenAI, Microsoft is finally addressing growing concerns around the profitability and long-term sustainability of the high-stakes alliance. For the first time, CEO Satya Nadella has spoken publicly about the evolving nature of the partnership—acknowledging changes that hint at underlying business tensions, even as both sides maintain they are committed to working together.

The remarks come at a time when questions are mounting about whether Microsoft’s massive investment is translating into direct financial returns, especially as OpenAI pursues its own ambitious expansion plans, such as the $500 billion Stargate project and new infrastructure deals with rival cloud providers.

In an interview with The Circuit’s Emily Chang (Bloomberg), Nadella admitted the collaboration is no longer what it once was. “Any company that has gone from being a research lab to one of the most successful product companies of this age — obviously things have to change for them and for us and in the context of the partnership,” he said, emphasizing that while the relationship is “evolving,” it remains strong.

Microsoft’s Profit Puzzle

At the core of the shift lies a fundamental issue: profitability. While Microsoft has become a leader in enterprise AI tools—embedding OpenAI’s models in everything from Windows to Microsoft 365 Copilot—the question remains how much actual revenue and profit the company is extracting from the arrangement.

Microsoft earns a cut from every query processed through ChatGPT that runs on Azure infrastructure. But building and maintaining the massive computing power needed to train and serve large AI models like GPT-4 is extremely expensive. Microsoft has not disclosed specific profit margins or return-on-investment figures from its OpenAI partnership, and the company’s recent comments suggest it is weighing whether the economics are sustainable.

Adding to the uncertainty, OpenAI’s GPT-4 has been criticized internally at Microsoft for being “too expensive and too slow” to meet the needs of mass-market consumer products.

Those concerns have reportedly led Microsoft to accelerate the development of its own in-house small language models—lighter, cheaper alternatives designed to support more nimble applications without relying entirely on OpenAI’s massive systems.

A Cooling Alliance?

The partnership has seen visible signs of cooling in recent months. Microsoft, which initially had exclusive cloud provider status for OpenAI, has since lost that exclusivity, though it retains a “right of first refusal” for future contracts. OpenAI has turned to Oracle and SoftBank as new collaborators in its expansion push, particularly as it embarks on building new data centers for AI development under its Stargate initiative.

Reports also surfaced that Microsoft canceled two major data center projects linked to OpenAI’s growing demand for computing, signaling Redmond’s unwillingness to further stretch its infrastructure to accommodate OpenAI’s increasingly aggressive roadmap.

In parallel, OpenAI CEO Sam Altman has grown more vocal about the company’s need to work beyond Microsoft. In a separate episode of The Circuit, Altman said although OpenAI has got a lot of great work with Microsoft, he thinks this is more than any one company can deliver, which means that OpenAI’s mission to reach Artificial General Intelligence (AGI) requires a broader base of support and collaboration.

Despite the increasingly public signs of divergence, Nadella insists Microsoft remains “thrilled” to have access to OpenAI’s models and continues to benefit from their success. “Having that multifaceted partnership is what we are really focused on,” he said. “Why would any one of us want to go upset that?”

He added: “Every day that ChatGPT succeeds is a fantastic day for Microsoft.” But the CEO’s remarks may also reflect a subtle recalibration: Microsoft is clearly preparing for a future in which OpenAI is no longer its sole, or even primary, AI partner.

Tech rivals, like Salesforce CEO Marc Benioff, have suggested Microsoft might eventually sever ties with OpenAI altogether, citing the growing cost and performance issues. Microsoft has so far avoided giving any indication of a formal split, but it is building out its own models, such as Phi-3, and doubling down on homegrown AI teams.

Nadella said he expects OpenAI to work with multiple partners going forward—a development he sees as natural.

However, the picture is changing fast. What began as a mutually dependent partnership has morphed into something far more fluid, as both Microsoft and OpenAI seek autonomy, scale, and profit in the fast-moving AI race.

This means that the next phase may not be about deepening ties with OpenAI, but about ensuring that the billion-dollar investment delivers real returns—or, failing that, building a competitive engine of its own.

China’s rare earth exports surged in May to their highest monthly level in a year, but the increase has raised more questions than clarity as restrictions on shipments to the United States and Europe remain in effect.

Data from China’s General Administration of Customs on Monday showed the country exported 5,864.6 metric tons of rare earth materials in May, a 23 percent rise from April and the highest monthly figure since mid-2023. Cumulatively, exports in the first five months of 2025 reached 24,827 tons, only a slight increase from 24,266.5 tons over the same period last year.

Beijing’s tighter grip on its rare earth sector began in April when it imposed export license requirements on several key rare earth magnet materials and high-purity compounds. These included neodymium, praseodymium, dysprosium, and terbium — critical elements used in electric vehicles, wind turbines, and military technology. The restrictions also applied to high-performance NdFeB magnets and samarium-cobalt magnets essential for aerospace and defense.

At the time of the announcement, China’s Ministry of Commerce said the new controls were necessary “to safeguard national security and fulfill international obligations.” It added that the measures were being introduced under the country’s Export Control Law and Counter-Espionage Law, which were amended to include strategic resources such as rare earths.

The restrictions triggered immediate disruptions in supply chains across Europe and North America. By late May, several European auto component factories’ operations have been significantly impacted due to shortages of rare earth magnets. Semiconductor firms also warned they were just weeks away from shutting down production lines.

Despite the tight export controls, China granted limited exemptions in late May following diplomatic outreach from Washington and Brussels. According to a source familiar with the matter, “Two U.S. automotive suppliers were granted small-volume permits for mid-grade NdFeB magnets, enough to cover some production through the third quarter.” A European official confirmed that “a German aerospace subcontractor received a one-time export license for samarium-cobalt rotors to keep a military contract on schedule.”

These approvals, however, remain exceptional rather than systemic.

The spike in May’s export volume has puzzled industry observers, particularly since, as of that month, direct exports of many rare earth products to the U.S. and EU were still blocked.

Against this backdrop, many are asking: Where exactly did those materials go? There’s no evidence that China has resumed large-scale exports to the West, buoying curiosity about a volume jump that doesn’t align with current licensing policies.

Shipping data reviewed by multiple trade intelligence platforms suggests that much of the May increase was routed through third-party markets. Indonesia, Malaysia, and the United Arab Emirates saw marked increases in rare earth imports from China. These countries are known to serve as assembly or re-export hubs for rare earth-based components.

Rare earths have become a central fault line in U.S.-China trade tensions. Although these minerals were not targeted during the earlier rounds of trade tariffs, they have since emerged as critical leverage for Beijing. In a rare phone call between President Donald Trump and Chinese President Xi Jinping last week, the matter of rare earth access reportedly figured heavily, according to White House officials.

The United States and its allies have been scrambling to develop alternatives. In California, MP Materials is expanding rare earth refining capacity with support from the U.S. Department of Defense, while in Germany, a proposed magnet manufacturing plant is being fast-tracked using feedstock sourced from Australia. Japan has also doubled subsidies for rare earth recycling programs in a bid to ease dependence on Chinese supply.

However, as of now, China remains the dominant player — responsible for about 70 percent of global mining output and more than 85 percent of processing capacity.

With the next customs breakdown due later this month, traders and policymakers are watching closely to see whether the May surge was an anomaly, a tactical concession, or a sign of a more complex export strategy designed to maintain dominance while appearing compliant.

Africa is moving to take control of its narrative in global finance, as a new continental credit rating agency is set to begin operations by September 2025.

Known as the African Credit Rating Agency (AfCRA), the initiative aims to challenge what African leaders and economists see as systemic bias by the world’s top rating firms—Moody’s, S&P, and Fitch.

The African Union-backed agency is being developed under the African Peer Review Mechanism (APRM) and will issue its first sovereign credit rating between late 2025 and early 2026, according to Misheck Mutize, lead expert on credit rating agencies at the APRM. Currently, AfCRA is finalizing the selection of its first CEO, with an appointment expected before the end of the third quarter of 2025.

A Response to Decades of Criticism

The launch of AfCRA marks a significant policy and economic milestone, built on long-standing frustration with how global rating firms evaluate Africa’s economies. Countries such as Ghana, Zambia, and Nigeria have frequently criticized these firms for downgrades they say are based on flawed assumptions, externalized perceptions, and inadequate understanding of the continent’s unique risks and opportunities.

In the case of Zambia, which defaulted on its Eurobond payments in 2020, officials partly blamed international rating downgrades for triggering a self-fulfilling debt spiral that scared off investors and hiked borrowing costs. Similarly, Ghana, which defaulted in 2022, has argued that pessimistic ratings fuel speculation and restrict access to credit long before countries face actual fiscal collapse.

In a more recent example, the African Peer Review Mechanism directly challenged Fitch Ratings for its downgrade of the African Export-Import Bank (Afreximbank). The APRM accused Fitch of poor analysis and a “misunderstanding of African institutions.” Fitch responded by defending its methodology as globally consistent and transparent.

Safeguarding Independence

Unlike the major international rating agencies—often accused of being shaped by geopolitical interests—AfCRA will not be state-owned, Mutize said.

“This was designed to maintain independence and avoid conflict of interest. Shareholding will mainly be African private-sector driven entities,” he explained.

AfCRA’s governance structure is intended to shield the agency from political interference while also making its operations more transparent and locally informed. Crucially, it aims to be objective and credible, with Mutize emphasizing that AfCRA is not being designed to provide inflated scores.

“It is important to debunk the assumption that AfCRA is being established to give favorable ratings to Africa. No. We will issue downgrades where necessary,” he said.

Focusing on Local Currency Ratings

A key feature of AfCRA will be its focus on local-currency debt ratings, a shift that could have significant implications for Africa’s financial sovereignty. AfCRA hopes to bolster domestic capital markets and reduce overreliance on costly foreign-currency borrowing, which exposes economies to exchange-rate shocks and repayment risks, by prioritizing local-currency evaluations.

This approach aligns with the growing call among African financial institutions to de-dollarize debt and tap into local savings, pension funds, and regional capital pools for long-term infrastructure and development financing.

UN and ECA Back Africa’s Push

The agency is also being launched with strong support from global institutions like the United Nations Economic Commission for Africa (ECA). Claver Gatete, ECA’s Executive Secretary, recently criticized the current credit rating landscape, saying that African nations are being saddled with disproportionately high borrowing costs due to being consistently rated “junk” by the dominant agencies.

Gatete pointed out the disparity in real terms: while Germany can borrow $1 billion at a 2.29% interest rate—translating to about $229 million in interest over a decade—Zambia, under current credit conditions, would pay as much as $2.25 billion in interest for the same amount, nearly ten times more.

He warned that credit ratings continue to be shaped by external biases and often fail to incorporate a nuanced understanding of African political economies.

According to Gatete, most major rating agencies are headquartered outside Africa and often assess the continent through an external lens.

Many believe that these “outside-in” assessments ignore internal structural reforms, fail to recognize regional resilience, and ultimately make it more expensive for African countries to access the capital they need to grow.

A First of Its Kind

While the idea of an Africa-led credit rating agency has circulated for years, AfCRA is the first such effort poised to become operational, with institutional backing, private sector involvement, and a clearly stated regulatory agenda. What sets it apart is not just its continental scope, but the fact that it will actively rate sovereign risk with a mandate rooted in fairness, transparency, and context.

Although various African governments and financial institutions have voiced concerns about rating bias in the past, this marks the first time a coordinated response of this scale is materializing—one that may also indirectly shape the standards and expectations of international agencies operating on the continent.