Microsoft Considers Taking Action: OpenAI and Amazon's Private $50 Billion Cloud Deal Violates Exclusivity Agreement

Microsoft is considering legal action against partners OpenAI and Amazon. The trigger is a $50 billion agreement that makes Amazon the exclusive cloud provider for OpenAI’s enterprise platform Frontier. Microsoft believes this may violate its long-standing exclusive contract with OpenAI.

AWS becomes OpenAI’s exclusive cloud partner, and Microsoft firmly states: breach will lead to lawsuits.

From November last year to February this year, Amazon and OpenAI signed several agreements, the most critical being making Amazon Web Services (AWS) the exclusive third-party cloud provider for OpenAI’s enterprise AI platform Frontier. However, Microsoft’s long-term contract with OpenAI specifies that all requests to access OpenAI models must be routed through the Azure platform.

Therefore, whether this new agreement constitutes a breach of the existing long-term contract has become the core dispute among the three parties.

(OpenAI and AWS reach $38 billion cloud partnership to pave the way for IPO and reduce reliance on Microsoft)

According to the Financial Times, Microsoft executives believe that Amazon and OpenAI’s approach is technically unfeasible and violates contractual terms. An insider revealed a strongly worded statement:

“We are clear on our contractual terms. If they breach, we will sue. If Amazon and OpenAI want to gamble with their contract lawyers’ creativity, I bet on our side winning, not theirs.”

However, the report also notes that the three parties are still negotiating, hoping to resolve the dispute through out-of-court discussions before Frontier officially launches.

Different Perspectives: State vs. No State

Microsoft believes that any form of model access, including “stateful” interactions with memory and context, should go through Azure. OpenAI emphasizes that its collaboration with AWS only involves “stateless” interactions, which do not retain conversation memory, thus not violating the contract. The company also reiterates that it has the right to partner with third parties outside of API products.

Amazon has even instructed employees to use phrases like “integrated or driven by OpenAI” when describing an AI system architecture called SRE, deliberately avoiding any language that implies direct access to the ChatGPT API, highlighting the sensitivity around contractual boundaries.

The Love-Hate Relationship Between Microsoft and OpenAI

Microsoft and OpenAI’s partnership dates back to 2019, when Microsoft first invested $1 billion, becoming a key early supporter of the AI startup. In early 2023, Microsoft invested an additional $10 billion and established Azure as the exclusive cloud provider for OpenAI models, setting impressive cloud revenue records.

However, as OpenAI’s influence grew, the relationship changed. In September 2025, the two companies signed a non-binding new relationship agreement, opening the door for collaborations with third-party partners like SoftBank, NVIDIA, and Amazon, while maintaining Azure’s exclusive status in principle.

Now, as OpenAI prepares for an IPO, having just completed a $110 billion funding round and facing lawsuits from Elon Musk, the company is also embroiled in legal disputes with Microsoft.

This legal showdown not only concerns cloud revenue sharing among the three parties but also reveals OpenAI’s strategic shift toward independence from partners and reliance on Microsoft. It also reflects Microsoft’s changing attitude, viewing former allies as potential competitors.

(OpenAI completes the largest funding round in history at $110 billion! Partnering with Amazon, NVIDIA, and SoftBank, valuation reaches $730 billion)

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