OpenAI left Azure for AWS after $1B Microsoft deal
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- OpenAI asked Microsoft for roughly $300 million in Azure compute at list prices in 2017 to expand its Dota 2 research.
- Jason Zander warned in an August 2017 email that the $300 million request would need $500 million+ incremental revenue to make sense for Microsoft.
- Altman later proposed a partnership with Xbox, offering to share technology and IP for expanded Dota sponsorship, but Xbox could not fully fund the research.
- Kevin Scott expressed in a January 2018 email that not funding OpenAI could cause them to “storm off to Amazon” and “shit‑talk” Azure, urging Azure to become a net promoter.
- Microsoft invested $1 billion in OpenAI a year after Scott’s concerns, cementing the partnership.
- OpenAI recently renegotiated its agreement to bring its models, including Codex, to AWS, citing that the Microsoft deal limited its ability to meet enterprises using Amazon Bedrock.
Why it matters: Microsoft’s early worry that losing OpenAI would harm Azure’s reputation led to a $1 billion investment to lock the partnership, yet the recent renegotiation allowing OpenAI’s models on AWS undercuts Azure’s AI edge and gives Amazon a new enterprise AI channel, reshaping the cloud AI competitive landscape.
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