Free Rent: OpenAI Deal Shows One Way Microsoft Seeds Its Cloud

When Microsoft in 2019 said it had invested $1 billion in OpenAI, the high-profile artificial intelligence startup agreed to develop its products exclusively using Microsoft’s Azure cloud servers. It appeared to be a big customer win for Microsoft Azure in its battle against rivals such as Google Cloud and Amazon Web Services.

Since then, OpenAI has generated global excitement—and tens of millions of dollars in revenue—from selling access to AI that generates original programming code, text or images. That might pay dividends for Microsoft as it sells more OpenAI-powered software to Azure customers. But OpenAI has barely generated revenue as a customer of Azure, according to internal data viewed by The Information. That’s because the deal with Microsoft included a lot of Azure credits, meaning OpenAI could rent the Azure servers to train its machine learning models practically for free.