Microsoft is reportedly prepared to walk away from ongoing high-stakes negotiations with OpenAI as both companies struggle to reach consensus on critical terms governing the future of their $13 billion partnership.

The tech giant has signaled that unless OpenAI presents a deal equal or superior to existing arrangements, it is ready to continue operating under its current contract—which secures exclusive access to OpenAI’s models through 2030—without committing to further equity investment or concessions.

This development, first reported by the Financial Times, throws a spotlight on the mounting tensions between the two AI powerhouses, with negotiations stalled over equity stakes, revenue sharing, infrastructure demands, and the strategic direction of the partnership.

A Fractured Alliance

OpenAI is in the midst of a structural transformation, seeking to shift from its original nonprofit status to a for-profit public-benefit corporation. This conversion is central to its goal of unlocking billions in funding, launching an IPO, and maintaining investor confidence. Microsoft’s approval is a legal requirement for this transition to succeed.

However, Microsoft is hesitant to commit to a restructuring that would diminish its control over OpenAI’s most valuable outputs. Sources familiar with the talks say both parties are clashing over how much of OpenAI’s restructured equity Microsoft should receive in exchange for its investment. While figures ranging from 20% to 49% have reportedly been discussed, Microsoft is reluctant to reduce its existing contractual benefits, particularly its share of revenues from OpenAI, currently capped at $92 billion with a 20% cut.

Insiders say OpenAI is now proposing to reduce Microsoft’s revenue share to as little as 10% by 2030, a move the tech giant views as diminishing its return on a massive outlay. Microsoft sources argue that public markets and shareholders care more about monetized access to AI infrastructure than about how much equity the company owns in a third-party vendor like OpenAI.

Strategic Stakes for Both Parties

Despite the tension, Microsoft and OpenAI released a joint statement saying, “We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing and we are optimistic we will continue to build together for years to come.”

However, the atmosphere behind closed doors tells a different story. According to reports, OpenAI has even contemplated a “nuclear option”—accusing Microsoft of anti-competitive behavior—to pressure the company into loosening its grip on the current partnership terms.

One person close to OpenAI described Microsoft’s negotiation stance as “just making OpenAI sweat,” underscoring the software giant’s leverage in the talks. Another Microsoft insider added, “The status quo is fine with us. We’re happy with the current contract and prepared to run it through until 2030.”

However, for OpenAI, securing this deal is not optional. Several investors in recent financing rounds—most notably SoftBank, which led a $30 billion round—have agreed to terms that require the nonprofit-to-for-profit conversion. Without Microsoft’s consent by the end of 2025, OpenAI risks losing billions in committed capital. SoftBank alone could retract $10 billion if the transition is not completed on time. Though OpenAI’s leadership believes backers will remain on board even in the event of delays, the pressure to deliver is significant.

Diverging Agenda

Microsoft, led by CEO Satya Nadella, has been actively reducing its dependence on OpenAI models, anticipating a future in which foundational AI models become commoditized. Instead of betting solely on OpenAI, Microsoft is integrating multiple AI models into its cloud services. In May 2025, it began offering access to Elon Musk’s xAI Grok model to Azure customers—a move that underscores Microsoft’s pivot toward a multi-model ecosystem.

According to several sources, Microsoft is also becoming less patient with OpenAI CEO Sam Altman’s escalating demands for computing infrastructure. Altman has reportedly pressured Microsoft for faster access to GPUs and expanded server capacity to handle ChatGPT’s soaring user base—now at 500 million weekly active users globally—while also training new models.

The partnership has become particularly strained over infrastructure issues, with OpenAI also exploring alternative cloud partnerships with Oracle, Google Cloud, and SoftBank to diversify its backend operations.

Legal and Regulatory Hurdles

Even if both companies reach a new agreement, it must survive scrutiny from U.S. regulators. The conversion of OpenAI into a for-profit entity is subject to review by attorneys-general in California and Delaware, given its original nonprofit charter. Elon Musk, a former OpenAI board member and current head of xAI, has launched a legal challenge against the transformation, which further complicates the timeline and risks.

Additionally, current contract elements are under renegotiation, including Microsoft’s exclusive right to sell OpenAI’s products through its Azure cloud, its right of first refusal on infrastructure services, and its early access to OpenAI’s intellectual property in the event of a breakthrough in artificial general intelligence (AGI). Reports suggest the AGI clause may be dropped entirely, as it has become a point of contention.

The National Information Technology Development Agency (NITDA) has formally signed an agreement with a Japanese consortium to begin the implementation of the Abuja Startup Hub Project—an ambitious initiative aimed at transforming Nigeria’s digital economy and building a generation of globally competitive tech entrepreneurs.

The agreement was sealed in partnership with Oriental Consultants Global Co., Ltd., Intem Consulting Inc., and Yachiyo Engineering Co., Ltd., all representing the Japanese International Cooperation Agency (JICA), which is financing the project.

This latest development follows an earlier Memorandum of Understanding (MoU) signed on April 10, 2025, between Nigeria’s Minister of Budget and Economic Planning, Senator Atiku Bagudu, and Mr. Yuzurio Susumu, Chief Representative of JICA’s Nigeria Office. The MoU established the groundwork for Japanese support in developing high-impact startup infrastructure in the Nigerian capital.

A Two-Tier Project Worth Over $51 Million

The Abuja Startup Hub Project has two primary components. The first, led by NITDA, will focus on building a state-of-the-art digital startup hub valued at $11.2 million. This facility will house co-working spaces, digital labs, and innovation studios to foster entrepreneurship and collaboration among Nigerian startups.

The second component, valued at $40 million, will be implemented by the Nigeria Sovereign Investment Authority (NSIA) and will aim to create a nationwide supportive framework for social startups—enterprises focused on addressing development challenges in sectors such as education, health, agriculture, and financial inclusion.

Speaking at the signing ceremony in Abuja, NITDA Director General Kashifu Inuwa emphasized the growing partnership between Nigeria and Japan in the digital space. He cited previous collaborations like the iHatch incubation program, which has generated over 117 direct jobs and more than 370 indirect jobs, as examples of what the bilateral relationship has already accomplished.

Inuwa said the Startup Hub Project aligns closely with President Bola Tinubu’s Renewed Hope Agenda, particularly its core objective of driving inclusive economic growth through digital innovation and private sector investment.

He noted that the hub is expected to play a key role in Nigeria’s strategy to become a regional technology powerhouse, stating, “This project is more than bricks and mortar; it is about transforming ideas into impact and empowering our youths with 21st-century tools.”

The project will span five years and eight months, starting from April 2025 through December 2030, during which NITDA and NSIA will jointly oversee implementation and ensure that the infrastructure serves as a platform for sustainable innovation.

Bridging Nigerian and Japanese Tech Ecosystems

The Abuja initiative also aims to strengthen ties between Nigeria and Japan’s tech ecosystems. Inuwa said that NITDA and JICA are actively working to expand exchange programs, promote bilateral networking opportunities, and sponsor Nigerian startups to participate in Japanese accelerator programs and global pitch events.

He described the collaboration as a “strategic alignment of innovation ecosystems,” and praised the Japanese government for choosing to invest in Nigeria’s digital future. He indicated that with Japan’s renowned experience in technological excellence and Nigeria’s growing youth-driven innovation landscape, this partnership sets a foundation for mutual prosperity.

A Leap for Nigeria’s Startup Scene

The Abuja Startup Hub is expected to become a cornerstone of Nigeria’s digital economy, offering a space where emerging entrepreneurs can receive mentorship, secure venture capital, and collaborate with local and international partners. It is also anticipated to attract foreign direct investment (FDI) into Nigeria’s technology sector, further strengthening the country’s position as a key player in Africa’s innovation economy.

As the country races toward its goal of building a $1 trillion economy by 2030, experts say initiatives like this will be critical to unlocking job creation, improving tech exports, and nurturing homegrown unicorns.

Some believe that the Startup Hub Project, once completed, is poised to serve not only as a physical infrastructure but as a symbol of Nigeria’s digital ambitions—a signal to global investors and innovators that the country is ready to lead in the 21st-century economy.