00:00Shares of Microsoft are down just slightly here, 1% and change on breaking news.
00:06It amended its deal with OpenAI, saying the OpenAI license is now non-exclusive
00:12and it's phasing out part of its revenue sharing plan.
00:16Bloomberg Tech co-host Ed Ludlow joins us now.
00:18So Ed, just give us the details on what we know so far.
00:22Yeah, I think the easiest way to do this is state what the net effects of the amended agreement are.
00:26The first is that OpenAI can now basically run and sell any of its products on any different cloud.
00:32They had already done deals, for example, with AWS earlier in the year, but that's now more codified.
00:38Microsoft has access to OpenAI's underlying technology through 2032.
00:44But because the license is now non-exclusive, anyone can now have similar rights and do similar deals with OpenAI.
00:51So that's interesting, right? The stock fell pretty profoundly in the moments after the red headlines down 4%.
00:58It's now paired some of those declines.
01:00The bit that's a bit confusing is that Microsoft will stop paying OpenAI.
01:06Microsoft stopped paying OpenAI a share of revenue.
01:09And how that was working was any revenues that Microsoft generated from a technology that had OpenAI's technology integrated into
01:18it,
01:18they would then share with OpenAI.
01:20But the reverse continues.
01:21So OpenAI continues to make payments to Microsoft, which is its biggest investor,
01:27largely because of the obligations OpenAI has to Microsoft for ongoing access to compute and Azure,
01:33and all of that codified back in October of last year.
01:37So basically, it's now open market.
01:39OpenAI can do business with others.
01:41Microsoft is less restricted as well.
01:44And the market's taking a moment to make sense of it.
01:46I hope that helps.
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