Microsoft is ready to step back from complex talks with OpenAI concerning their multibillion-dollar partnership, as the AI start-up aims to transform into a for-profit organisation, according to a report by the Financial Times.

The discussions hinge on key points, including the extent of Microsoft’s future ownership in OpenAI, with the tech giant contemplating maintaining its current deal, which extends to 2030, if no agreement is reached, the report said.

Insiders familiar with the company’s strategy told the FT that the company would continue using OpenAI’s technology under existing terms unless a superior alternative is proposed.

Nonetheless, both sides are engaging in daily discussions, expressing hope for a resolution. “We have a long-term, productive partnership that has delivered amazing AI tools for everyone,” Microsoft and OpenAI stated jointly.

“Talks are ongoing and we are optimistic we will continue to build together for years to come.”

OpenAI’s transition to a for-profit model is vital to secure additional investment and pave the way for a potential stock market debut. Microsoft’s consent is needed by the end of 2025 to avoid losing significant funding from backers like SoftBank.

The talks have centred on Microsoft’s possible equity share in the restructured OpenAI, with figures ranging from 20% to 49% for its $13bn investment so far.

The partnership, initiated with Microsoft’s $1bn commitment to OpenAI in 2019, is also being reassessed.

Currently, Microsoft has sole rights to market OpenAI’s models and earns 20% of revenues up to $92bn.

Sources told the new agency that Microsoft is hesitant to relinquish its access to OpenAI’s technology or its revenue portion.

The Wall Street Journal reported that OpenAI considered alleging anti-competitive practices by Microsoft.

“Holding out is Microsoft’s nuclear option . . . and they are just making OpenAI sweat,” a source near OpenAI said, noting that OpenAI’s intellectual property is crucial for Microsoft to stay competitive against companies like Google and Meta.

A source close to Microsoft countered that the company is satisfied with the current agreement and willing to uphold it until 2030.

Microsoft has recently broadened its AI approach, integrating xAI’s Grok model into its cloud services in May.

Additional contract terms under discussion include Microsoft’s exclusive rights to distribute OpenAI’s software through Azure, its priority to supply computing infrastructure, and access to OpenAI’s intellectual property before it achieves “artificial general intelligence,” a provision likely to be eliminated.

OpenAI’s leaders, including Sam Altman and Sarah Friar, have highlighted difficulties in obtaining enough computing resources to support ChatGPT’s 500 million weekly users and develop new models.

Former Microsoft executives noted tensions over OpenAI’s requests for quicker access to computing infrastructure.

Even if a deal is finalised, it must pass regulatory review in Delaware and California and faces a legal challenge from Elon Musk, supported by ex-OpenAI staff.

For OpenAI, an agreement with Microsoft is essential. Investors, including SoftBank, have linked their funding to the for-profit transition.

If the shift is delayed or fails, SoftBank could reduce its $30bn investment by $10bn.