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Posted by meetpateltech 10/28/2025

The next chapter of the Microsoft–OpenAI partnership(openai.com)
366 points | 480 commentspage 2
danans 10/28/2025|
> Once AGI is declared by OpenAI ...

I think it's funny and telling that they've used the word "declare" where what they are really doing is "claim".

These guys think they are prophets.

k9294 10/28/2025||
They have a definition actually) “When AI generates $100 billion in profits” it will be considered an AGI. This term was defined in their previous partnership, not sure if it's still holds after the restructuring.

https://techcrunch.com/2024/12/26/microsoft-and-openai-have-...

torginus 10/28/2025|||
That is a staggering number - if an engineer makes $100k per year, and let's say OpenAI can do a 20% profit margin on running an engineer-equivalent agent, that means it needs $600B profit or 6 million fully-equivalent engineer years.

I think you can rebuild human civilization with that.

I feel like replacing highly skilled human labor hardly makes financial sense, if it costs that much.

milkshakes 10/29/2025||
how much does an ai researcher make per year though?
lm28469 10/28/2025||||
Which means that given enough time an LLM powered vending machine would be classified as AGI... interesting
dandanua 10/28/2025||
Why wait? Just let it bet $100 billions on red or black in a casino a couple of times, and voila!
qnleigh 10/28/2025|||
I wonder if they have more detailed provisions than this though. For example, if a later version of Sora can make good advertisements and catches on in the ad industry, would that count?

Or maybe since it is ultimately an agreement about money and IP, they are fine with defining it solely through profits?

vdfs 10/28/2025|||
OpenAI: I DECLARE AGI

MS: I just wanted you to know that you can't just say the word AGI and expect anything to happen.

OpenAI: I didn't say it. I declared it.

whamlastxmas 10/28/2025|||
It goes on to say it'll be reviewed by independent third party so I think "declare" is accurate, they're declaring a milestone
danans 10/29/2025||
I think the correct word is "propose".
cool_man_bob 10/28/2025||
> These guys think they are prophets.

You say this somewhat jokingly, but I think they 100% believe something along those lines.

danans 10/28/2025||
>> Whether you are an enterprise developer or BigTech in the US you are on average making twice the median income in your area. There is usually no reason for you not to be stacking cash.

Accidental misquote?

healsdata 10/28/2025||
I'm not savvy on investment terms, but most of these bullet points seem like a loss for Microsoft.

What's the value in investing in a smaller company and then giving up things produced off that investment when the company grows?

jasode 10/28/2025||
> and then giving up things produced off that investment when the company grows?

An investor can be stubborn about retaining all rights previously negotiated and never give them up... but that absolutist position doesn't mean anything if the investment fails.

OpenAI needs many more billions to cover many more years of expected losses. Microsoft itself doesn't want to invest any more money. Additional outside investors don't want to add more billions in funding unless Microsoft was willing to give up a few rights so that OpenAI has a better competitive position against Google Gemini, Anthropic, Grok etc.

When a startup is losing money and desperately needs more capital, a new round of investors can chip away at rights the previous investor(s) had. Why would previous original investors voluntarily agree to give up any rights?!? Because their investment is at risk if the startup doesn't get a lot more money. If the original investor doesn't want to re-invest again and would rather others foot the bill, they sometimes have to be a little flexible on their rights for that to happen.

mrweasel 10/28/2025|||
If Microsoft doesn't believe that OpenAI will achieve AGI by 2030 or that there's a chance that OpenAI won't be the premiere AI company in four years, the deal looks less like a lose and more like they are buying their way out of a risky bet. On the other hand, if OpenAI does well, then Microsoft have a 27% stake in the company and that's not nothing.

This looks more like Microsoft ensuring that they'll win, regardless of how OpenAI fairs in the next four to six years.

onion2k 10/28/2025|||
I'm not savvy on investment terms, but most of these bullet points seem like a loss for Microsoft.

Having a customer locked in to buying $250bn of Azure services is a fairly big benefit.

ml-anon 10/28/2025|||
Or a massive opportunity cost. I’d imagine 250Bn of OAI business is way lower margin than 250Bn of some other random companies that don’t need H200s.
fulafel 10/30/2025||
Why does this cost them business with the other random companies?
creddit 10/28/2025||||
MSFT had a right to compute exclusivity.

"Microsoft will no longer have a right of first refusal to be OpenAI’s compute provider."

Seems like a loss to me!

davey48016 10/28/2025||
I assume that first refusal required price matching. If the $250B is at a higher price than whatever AWS, GCP, etc. were willing to offer, then it could be a win for Microsoft to get $250B in decent margin business over a larger amount of break even business.
yreg 10/28/2025|||
The risk stays somewhat similar. If OpenAI collapses it won't spend those 250B.
drexlspivey 10/28/2025|||
Yeah poor microsoft, they invested $1B in 2019 and it’s now worth $135B
ForHackernews 10/28/2025||
Not worth anything until they sell it. There were a lot of excited FTX holders, too.
yas_hmaheshwari 10/28/2025|||
I was thinking exactly the same. Maybe someone who understands these terms and deal better shine light on why would Microsoft agree to this
gostsamo 10/28/2025|||
If there is need of more capital, you either keep your share without the capital injection and the share goes to zero or you let in more investors, dilute your share, but its overall value increases. Or you can let in more people and sign an agreement that part of the new money will be paid to you in the form of services that you provide.
justinbaker84 10/28/2025|||
I was thinking the same thing.
soared 10/28/2025||
Exponential growth
bwfan123 10/28/2025||
So, openai has contracts worth 250B with azure and 300B with oci in the next 5 years. Where is that money coming from ?
thebruce87m 10/28/2025|
It’s like the Spider-Man meme with everyone pointing at each other.
GuinansEyebrows 10/28/2025||
GDP is up, baby!
Amekedl 10/28/2025||
Regarding LLMs we're in a race to the bottom. Chinese models perform similarly with much higher efficiency; refer to kimi-k2 and plenty of others. ClopenAI is extremely overvalued, and AGI is not around the corner because among 20T+ tokens trained on it still generates 0 novel output. Try asking for ASP.NET Core .MapOpenAPI() instead of the pre .net9 swashbuckle version. You get nothing. It's not in the training data. The assumption these will be able to innovate, which could explain the value, is unfounded.
lm28469 10/28/2025||
> because among 20T+ tokens trained on it still generates 0 novel output. Try asking for ASP.NET Core .MapOpenAPI() instead of the pre .net9 swashbuckle version. You get nothing. It's not in the training data.

The best part is that the web is forever poisoned now, 80% of the content is generated by LLM and self poisoning

IncreasePosts 10/28/2025||
There are enough archives of web content from 5+ years ago(let alone, Library of Congress archives, old book scans, things like that) that it shouldn't be a big deal if there actually is a breakthrough in training and we move on from LLMs.
energy123 10/28/2025|||
They perform similarly on benchmarks, which can be fudged to arbitrarily high numbers by just including the Q&A into the training data at a certain frequency or post-training on it. I have not been impressed with any of the DeepSeek models in real-world use.
deaux 10/28/2025||
General data: hundreds of billions of tokens per week are running through Deepseek, Qwen, GLM models solely by those users going through OpenRouter. People aren't doing that for laughs, or "non-real-world use", that's all for work and/or prod. If you look at the market share graph, at the start of the year the big 3 OpenAI/Anthropic/Google had 72% market share on there. Now it's 45%. And this isn't just because of Grok, before that got big they'd already slowly fallen to 58%.

Anecdata: our product is using a number of these models in production.

[0] https://openrouter.ai/rankings

energy123 10/28/2025|||
Because it's significantly cheaper. It's on the frontier at the price it's being offered, but they're not competitive in the high intelligence & high cost quadrant.
deaux 10/28/2025||
Being the number one in price vs quality, or size vs quality, is incredibly impressive, as the quality is clearly one that's very useful in "real-world usage". If you don't find that impressive there's not much to say.
energy123 10/28/2025||
If it was on the cost vs quality frontier I would find it impressive, but it's not a marker of innovation to be on the price vs quality frontier, it's a marker of business strategy
deaux 10/28/2025||
But it is on the cost vs quality frontier. The OpenRouter prices are all from mainly US(!) companies self-hosting and providing these models for inference. They're absolutely not all subsidizing it to death. This isn't Chinese subsidies at play, far from it.

Ironically, I'll bet you $500 that OpenAI and Anthropic's models are far more subsidized. We can be almost sure about this, given the losses that they post, and the above fact. These providers are effectively hardware plays, they can't just subsidize at scale and they're a commodity.

On top of that I also mentioned size vs quality, where they're also frontier. Size ≈ cost.

senordevnyc 10/29/2025|||
Honestly though, hundreds of billions of tokens per week really isn't that much. My tiny little profitable SaaS business that can't even support my family yet is doing 10-20 billion tokens per month on Gemini Flash 2.5.
deaux 10/30/2025||
Looks like over the last month just Deepseek, Qwen and Z-AI did about 2.8 trillion tokens, given your metric the equivalent to about 187 tiny little profitable SaaS businesses, and that's only those who go through OpenRouter. To me that's very significant.

Also, congrats on the traction ! Being profitable enough to support a family is 95% area-CoL and family size so not sure about that one, but if you're doing that many tokens you've clearly got a good number of active users. We're at a similar point but only 100-200 million tokens per month, strictly B2C app though so that might explain it, tends to be less token heavy.

2.5 Flash is still fantastic especially if you're really input heavy, we use it too for many things, but we've found several open weights models to have better price/quality for certain tasks. It's nice that 2.5 Flash is fast but then speed is most important for longer outputs and for those Flash is relatively expensive. DeepSeek v3.1 is all-around cheaper, for one example.

senordevnyc 10/30/2025||
Google just said yesterday that they're doing 7 billion tokens per minute for their customers via API. Crazy.

Thanks for the kudos, it's going well so far. But I'm in NYC and have kids, so...the bar is high :)

eitally 10/28/2025||
Eh... perhaps a race to the bottom on the fundamental research side, but no American company is going to try to build their own employee-facing front end to an open Chinese model when they can just license ChatGPT or Claude or Copilot or Gemini instead.
drusepth 10/28/2025||
It seems really weird to me that such granular intercorporate details are made publicly available (in a blog post?). I've never had to publicly state things like this when making corporate partnerships. That makes me wonder how much of this post is crafted solely for PR...
ethbr1 10/28/2025|
I believe MS declares Q1 earnings today, and there had been some rumblings that they were risking accounting / reporting liability by failing to characterize their material OpenAI stake.

What probably happened:

   1. MS's accountants raised a warning
   2. Existing agreement prohibited disclosure of terms
   3. MS told OpenAI that wasn't acceptable and MS needed to publicly report details today
   4. OpenAI coordinated release of this, to spin the narrative
a_victorp 10/28/2025||
It's always the earnings reports!
meetpateltech 10/28/2025||
Microsoft’s announcement:

https://blogs.microsoft.com/blog/2025/10/28/the-next-chapter...

Also: Built to Benefit Everyone — by Bret Taylor, Chair of the OpenAI Board of Directors

https://openai.com/index/built-to-benefit-everyone

blitzar 10/28/2025||
> Built to Benefit Everyone

Whats my share then?

wiseowise 10/28/2025|||
You get to contribute your data for the Moloch.
justinbaker84 10/28/2025||
Microsoft is saying they have a 27% stake in the company after this deal closes.
photochemsyn 10/28/2025||
I'd pay attention to this bullet point:

> "OpenAI can now provide API access to US government national security customers, regardless of the cloud provider."

And this one might be related:

> "OpenAI can now jointly develop some products with third parties. API products developed with third parties will be exclusive to Azure. Non-API products may be served on any cloud provider."

Now, does anyone think MIC customers want restricted, safe, aligned models? Is OpenAI going to provide turnkey solutions, unaligned models run in 'secure sandboxed cloud environments' in partnership with private weapons manufacturers and surveillance (data collection and storage/search) specialists?

This pattern is not historically unusual, turning to government subsidies and contracts to survive a lack of immediate commercial viability wouldn't be surprising. The question to ask Microsoft-OpenAI is what percentage of their estimated future revenue stream is going to come from MIC contracting including the public private grey area (that is, 'private customers' who are entirely state-funded, eg Palantir, so it's still government MIC one step removed).

anticensor 10/29/2025|
Or, provide intentionally mal-aligned models that treat its own military as enemy.
deanmoriarty 10/28/2025||
I always see a large amount of pessimism about this company on HN, and I accept it might be for rational reasons. What do people think is going to be the most likely outcome for the company, since everything seems to be going so bad for them product/moat/financial-wise? Do people think it will literally go bust and close business due to bankruptcy within a couple years? If not, what else?
Ericson2314 10/28/2025|
It could be acquired by microsoft with large layoffs, and kinda run in me maintenance mode — if inference gets cheaper.

If inference stays too expensive, then I don't know what happens, maybe a few people will pay for it.

atbvu 10/28/2025||
Every time they bring up AGI, it feels more like a business strategy to me. It helps them attract investors and dominate the public narrative. For OpenAI, AGI is both a vision and a moat.
eggbrain 10/28/2025|
If we assume token providers are becoming more and more of a commodity service these days, it seems telling that OpenAI specifically decided to claw out consumer hardware.

Perhaps their big bet is that their partnership with Jony Ive will create the first post-phone hardware device that consumers attach themselves with, and then build an ecosystem around that?

respondo2134 10/28/2025|
this would be an incredibly tough play. We've seen few success stories, and even when the product is good building the business around them has often failed. Most of the consumer plays are terrible products with weak execution and no real market. I have no doubt they could supplement lots of consumer experiences but I'm not sure how they are more than a commodity component in that model. I'm a die-hard engineer, but equating the success of the iphone to Ive's design is like saying the reason there were so many Apple II's in 80's homes and classrooms was because of Woz's amazing design.
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