According to a Bloomberg report, the layoffs are expected shortly after Microsoft’s fiscal year ends on June 30. While the number of affected employees has not been disclosed, the planned cuts are expected to go beyond staffing, with reductions also being considered across marketing and other operational budgets.

The restructuring will be the first major overhaul since Asha Sharma became chief executive of Xbox in February.

Sharma reportedly outlined the challenges facing the gaming business in an internal message to employees. She said Xbox’s accountability margin had fallen to just 3% despite the company spending more than $20 billion over the past five years on content, platforms and hardware subsidies. During the same period, annual revenue declined by almost $500 million.

The Xbox chief told staff the business would need to rebuild parts of its platform infrastructure and reassess its portfolio in the months ahead. Bloomberg reported that Sharma and Chief Content Officer Matt Booty have described the current period as an “Xbox Reset”, aimed at putting the division on a more sustainable path.

The planned changes come as Xbox works to overcome challenges across several parts of its business. Microsoft’s drive into subscription gaming and cloud services has not delivered the growth needed to offset weaker console sales.

At the same time, the company has faced complaints over a lack of major exclusive titles capable of driving hardware demand.

Growth in Game Pass subscriptions has also stalled. In April, Microsoft cut Game Pass prices and announced that future Call of Duty titles would no longer launch on the service on day one, marking one of the first major strategic changes under Sharma’s leadership.

The company is also dealing with high hardware costs. Reports say increasing component prices have significantly raised storage costs, creating additional pressure on Microsoft’s long-term console plans, including work linked to its next-generation gaming platform, codenamed Helix.

As part of the reset, Xbox is expected to place greater emphasis on its biggest gaming franchises, including Halo, Gears of War and Forza.

The company recently confirmed that upcoming titles such as Gears of War: E-Day and Clockwork Revolution will not launch on competing platforms including PlayStation and Nintendo Switch, while it focuses on strengthening the Xbox ecosystem.

Microsoft has not publicly commented on the reported layoffs.

The platform expects the unit to reach an annualised run rate of about $100 million in the next fiscal year, according to a source familiar with the plan.

The Microsoft-owned company introduced BrandWorks internally in March 2026. Since then, the team has expanded by roughly 60%, with new hires coming from TikTok, Meta and X.

It now focuses on building higher-performing campaigns for enterprise clients, including SAP, IBM and ServiceNow.

BrandWorks also runs programmes that link advertisers with creators. One of them, Top Voices 360, supports sponsored content partnerships and has generated over $20 million between May 2025 and May 2026.

“We’re developing services that are designed to meet the marketer where they are,” said Alex Josephson, vice president of BrandWorks, who previously built a similar offering called Twitter Next.

LinkedIn is enhancing its focus in B2B advertising, even as it competes with much larger companies in digital ads. Its advertising business brought in $8.2 billion in 2025 and is projected to rise to $9.7 billion in 2026, with a further increase to $11.3 billion expected in 2027.

Even with that growth, LinkedIn is still smaller than Meta and Google in overall ad scale. Still, it has carved out a strong niche, with about 80% of B2B marketing budgets now flowing into search and social platforms.

“We estimate that 80% of B2B budgets go into search and social media, with Google and LinkedIn the primary beneficiaries of those B2B dollars,” said Luke Stillman, managing director at trend advisory firm Madison and Wall.

LinkedIn’s ad footprint is also expanding in relative terms. It accounts for about 3.2% of US digital ad spend, 2.4% in the UK, and less than 2% across markets such as Brazil, France, Canada and Germany.

Video has become an important part of its strategy. The company reports that vertical video uploads rose by 36% in 2025. CEO video posts have also increased by 68% over the past two years.

Younger users are driving some of that transition. LinkedIn says Gen Z is its fastest-growing audience, with higher engagement in video content and creator-led posts.

BrandWorks by LinkedIn also supports BrandLink, a video-focused advertising programme. The company expects BrandLink revenue to nearly triple in the current fiscal year, although it has not disclosed the base figure.

RTX Spark, unveiled on Monday by Jensen Huang, chief executive during a keynote in Taipei ahead of the Computex technology conference, brings about a shift in how computers are used, moving away from traditional software-based workflows towards systems that can carry out tasks through AI agents.

“The PC is being reinvented,” Huang said. “For forty years, you launched apps. Click. Type. With RTX Spark and Microsoft Windows, you ask, and the PC does the work.”

RTX Spark is designed as a superchip built for what Nvidia describes as the “era of personal AI agents”. It combines a Blackwell-based GPU with a Grace CPU, delivering up to 1 petaflop of AI performance and 128GB of unified memory. 

Nvidia says this setup is intended to support complex AI tasks running directly on the device rather than in the cloud.

The company explained that the chip will allow users to run large language models locally, including systems with up to 120 billion parameters, while also handling demanding creative and gaming workloads. These include editing high-resolution video, generating AI video content, and running advanced 3D rendering tools.

Nvidia said RTX Spark systems will support Windows PCs built for what it calls “personal agents”, software that can carry out tasks across applications. The company is working with Microsoft to integrate the technology into Windows, including new security features designed to control how AI agents operate on a device.

Microsoft chairman and chief executive Satya Nadella said the collaboration aims to expand access to advanced computing tools. “Our goal is to deliver unmetered intelligence to every home and every desk with Windows,” he said.

The companies noted that the new Windows platform will include tools that allow users to manage what AI agents can access, how data is handled, and when information is processed locally instead of being sent to the cloud.

RTX Spark also targets creators and developers as Nvidia said the chip can support 90GB 3D scene rendering, 12K video editing, and AI-assisted design work. Users will be able to run high-end gaming titles at 1440p resolution with frame rates above 100 frames per second.

Adobe is among the companies adapting its software for the new system. It is reworking Photoshop and Premiere to take advantage of the hardware, with expected performance gains in AI tools such as generative editing and video expansion features.

Shantanu Narayen, Adobe’s chair and chief executive, said the changes would speed up creative work. “The best creative work in the world happens in Adobe tools from Adobe Firefly to Photoshop and Premiere, and the expansion of our partnership with NVIDIA and Microsoft will make those experiences faster and more powerful than ever,” he said.

Other software and gaming companies are also involved, including Blackmagic Design, Blender, ComfyUI, OTOY, and Xbox, all of which said they are preparing support for the new platform.

Hardware makers are preparing devices around the chip. Nvidia said laptops and compact desktops will be produced by companies including ASUS, Dell, HP, Lenovo, Microsoft Surface and MSI, with Acer and GIGABYTE also expected to join later. The first devices are scheduled for release in the autumn.

RTX Spark systems are expected to come in slim laptop designs and compact desktops aimed at both professionals and consumers. Nvidia said laptops will feature lightweight builds, OLED displays and all-day battery life.

With the launch, Nvidia is going beyond its traditional graphics chip business into full PC system design. Analysts say the move places the company in closer competition with Intel, AMD and Apple in the personal computing market.

• Big Tech calculated to harvest up to $162,492 per person in inflation-linked commercial value from internet users worldwide over a lifetime, according to first-of-its-kind report
• Across the world’s estimated 6,000 million internet users the report’s upper lifetime estimate would amount to approximately $745 trillion in commercial value.
• The study, which assessed 129 major companies, found Amazon, Alphabet, Microsoft, Meta and Anthropic are some of the most significant beneficiaries of data capture.

Web3 Foundation today launched ‘The Hidden Price of Free: What Your Data Is Really Worth’, a groundbreaking report revealing that Big Tech and AI companies earn upto $160,000 in commercial value from each internet user over a digital lifetime.

This equates to a staggering $745 trillion across the combined global population of internet users over a period of 60 years.

The study calculated the companies earn upto $8,500 per year from USA internet users per year, upto $2,206 per user in United Kingdom and Europe and $407 in the rest of the world. Globally this equates to an annual amount of upto $908 per internet user.

Over a lifetime that means the commercial value for a user in the USA is $511,869, UK and Europe $132,387, $24,424 in the rest of the world and overall $54,499 globally – or a huge $1.08m in the USA, $260,542 in UK and Europe, $72,821 elsewhere and $162,492 globally when inflation-linked.

In relative terms, the lifetime figure is equivalent to almost five years of full-time employment in the UK, using the ONS 2025 benchmark of $52,474 per annum.

On an inflation-linked basis, the US lifetime figure of $831,301 is roughly equivalent to two times the Q1 2026 median sales price of a new US house. Amazon, Alphabet (Google), Anthropic, Microsoft and Meta are explicitly listed in the report, each earning up to $1,000 annually on a single internet user.

The report shows that the modern internet is not free but paid for through personal data. Searches, clicks, locations, purchases, prompts, messages, images, preferences and behavioural signals are collected, analysed and monetised by some of the world’s most powerful companies, usually without users having meaningful visibility, bargaining power or participation in the value created.

Unlike previous attempts to estimate the value of personal data, which have focused mainly on advertising revenue per active user, Web3 Foundation’s methodology takes a broader view of how human data is monetised in the modern digital economy.

The study examines advertising, AI subscriptions, enterprise licensing, API access, data brokerage, marketplaces, algorithmic recommendations and AI-driven cost savings.

This allowed the findings to account not only for social media and search platforms, but also for emerging AI firms, hardware-linked digital ecosystems and data brokers whose business models increasingly depend on collecting, analysing and reusing personal data at scale.

The report stresses that the figures are not presented as precise valuations or direct cash entitlements owed to individuals. Instead, they are intended as a benchmark for understanding the scale of commercial value associated with personal data and the extent to which that value is captured by companies rather than users.

Why AI changes the data economy

Web3 Foundation argues that artificial intelligence makes the imbalance more urgent. Personal data is no longer used only to target adverts. It is used to train models, improve recommendations, power enterprise systems, build behavioural profiles, create predictive products and generate new forms of machine intelligence.

Every search query, location signal, online purchase, social interaction, uploaded image or chatbot prompt can become part of a wider data economy. As AI systems become more capable, human-origin data becomes more valuable, while users remain largely excluded from the economic upside.

Web3 as a different model

The report says Web3 offers a fundamentally different vision for the internet. Rather than relying on centralised platforms that collect and monetise user data behind closed doors, Web3 technologies are built on decentralised digital infrastructure that can give individuals greater control over their identity, assets and online activity.

In a Web3-enabled internet, users could decide what data they share, with whom and on what terms. The report argues this could shift power away from dominant technology platforms and towards the individuals who generate the underlying value.

“For too long, the internet has operated on an implicit bargain that users do not fully understand: convenience in exchange for surveillance. This report helps expose the scale of that imbalance. The modern digital economy is powered by human data, yet the people generating that value have little visibility, control or participation in the upside. Web3 technology can offer a path toward a more equitable internet, where individuals have genuine ownership over their digital lives rather than simply being the raw material for someone else’s business model.” – Gavin Wood, founder, Web3 Foundation

“The internet does not have to work this way. For decades, digital platforms have been built around centralised control, where users hand over their data, identity and value in exchange for access to services. Web3 represents a fundamentally different model, one where individuals can own their digital assets, verify their identity without surrendering personal information and participate more fairly in the online economy. As AI accelerates and data becomes even more valuable, building a more transparent, user-led internet is becoming increasingly urgent.” – Bill Laboon, vice president, Technical Operations, Web3 Foundation

The programme, unveiled in partnership with the Gates Foundation, Masakhane African Languages Hub, and Google.org, seeks to close the widening AI language gap that continues to exclude thousands of African languages from modern digital systems.

According to Microsoft, many African languages remain significantly underrepresented in AI datasets, models, and tools, limiting access to digital services in areas such as healthcare, education, agriculture, financial inclusion, and government services.

The company said the initiative is designed to support the creation of open language resources, AI models, translation tools, datasets, and sector-focused applications that can help communities interact with technology in their native languages.

Howard Lakougna, senior program officer at the Gates Foundation, said the initiative aims to remove barriers that have historically slowed AI innovation across Africa.

“LINGUA Africa seeks to encourage bold and innovative thinking by breaking down barriers that have long held back AI progress across the continent,” Lakougna stated.

The open call is inviting proposals from universities, nonprofits, startups, research institutes, cultural organisations, social enterprises, and collaborative consortia working in the public interest. Organisations outside Africa may also apply, provided they demonstrate meaningful partnerships with African institutions or communities.

Selected projects will receive funding support, Azure and Google Cloud compute credits, as well as technical collaboration opportunities from Microsoft’s AI for Good Lab and other ecosystem partners.

Microsoft outlined three key categories for support under the initiative:

• Data creation projects focused on building, documenting, validating, or translating African language datasets and resources;
• Model and tool development initiatives for AI models, benchmarks, and infrastructure;
• Sectoral applications deploying AI language technologies in real-world settings such as healthcare, education, agriculture, financial inclusion, and public services.

Funding support could range from up to $50,000 for data-focused projects to as much as $450,000 in cash for high-impact sectoral applications, alongside additional compute credits totally $1,050,000.

The initiative builds on Microsoft’s broader work around low-resource languages and follows the earlier LINGUA Europe programme, which supported AI resources for underrepresented European languages.

Africa is home to more than 2,000 languages, yet only a small fraction are represented in major AI systems and large language models.

Researchers have repeatedly warned that the lack of African language representation in AI could deepen digital inequality and limit participation in the emerging AI economy.

Recent research efforts across the continent have highlighted the growing need for African-led AI infrastructure and datasets.

In Nigeria, researchers continue to push for broader representation of minority languages beyond Hausa, Igbo, Yoruba, and Nigerian Pidgin, which currently dominate most local AI language research.

Microsoft said all supported projects under LINGUA Africa will be expected to contribute openly licensed resources that can be reused in research, open-source models, and practical applications.

Applications for the programme close on June 15, 2026.

How to apply:

Visit the website here to apply

The project, announced in May 2024 during President William Ruto’s visit to Washington, was expected to become one of the biggest digital infrastructure investments in East Africa. 

Microsoft and Abu Dhabi-based G42 planned to build the facility in Olkaria, near Naivasha, using geothermal power. It was also meant to host Microsoft’s first Azure cloud region in East Africa.

However, negotiations later became difficult after Microsoft and G42 asked the Kenyan government to guarantee annual payments for part of the data centre’s computing capacity. 

According to reports from Bloomberg, Kenya could not provide guarantees at the level the companies requested, and discussions on the Microsoft data centre project stalled.

The delay has now raised wider concerns about whether Kenya’s current infrastructure can support hyperscale data centres and growing artificial intelligence workloads.

At full scale, the facility was expected to require around 1 gigawatt of electricity. That is close to one-third of Kenya’s current installed power capacity, which stands between 3,000 and 3,200 megawatts.

President Ruto had earlier warned about the pressure such a facility could place on the country’s grid.

“To switch on that one data centre, we would need to shut off power for half the country.”

Kenyan officials say the project has not been abandoned. John Tanui, principal secretary at Kenya’s Ministry of Information, said discussions are still ongoing, although the structure and scale of the project is still under review.

“The scale of the data centre they wanted to do still requires some structuring,” he said, while adding that power requirements are still under discussion.

The government now wants to expand Kenya’s electricity capacity to 10,000 megawatts by 2030 as it pushes to attract more large-scale technology investments.

Officials are also considering a phased rollout, beginning with a smaller 100-megawatt facility before expanding gradually. That approach could reduce immediate stress on the national grid while allowing Kenya to continue negotiations with Microsoft and G42.

The uncertainty around the project also reveals a bigger challenge facing African countries trying to attract global cloud and AI investments. 

While demand for digital infrastructure is growing with speed, many countries still lack the power generation and transmission capacity needed to support energy-intensive facilities.

The delay could also affect the rollout of Microsoft Azure services across East Africa, including cloud tools tied to products such as OneDrive and Copilot.

Neither Microsoft nor G42 immediately responded to requests for comment on the reported Kenya data centre dispute.

Murati’s recorded testimony was played on Wednesday in Oakland, California, during Elon Musk’s lawsuit against OpenAI.

Musk accuses the company of abandoning the nonprofit mission it started with and turning into a profit-driven business tied to Microsoft.

Speaking about Altman’s leadership, Murati said: “My concern was about Sam saying one thing to one person and completely the opposite to another person.” 

She added that he was “creating chaos” inside the company and, at times, was deceptive with her and other executives.

The testimony focused heavily on the leadership situation that shook OpenAI in November 2023. At the time, the board removed Sam Altman as chief executive before bringing him back just days later, while Mira Murati briefly served as interim CEO during that period.

She told the court she still wanted Altman to remain chief executive, although she pressed board members for clearer reasons behind the decision to remove him. At the same time, she warned that the company faced serious internal problems.

“OpenAI was at catastrophic risk of falling apart,” Murati said. “I was concerned about the company completely blowing up.”

Murati later left OpenAI in 2024 and went on to co-found Thinking Machines Lab.

Another former OpenAI board member, Shivon Zilis, also gave evidence in the case. Zilis said the board had “extreme concern” about the release of ChatGPT without proper communication with directors.

Asked whether concerns about Altman had been raised internally, Zilis replied: “There had been a couple of instances.”

Zilis now works at Elon Musk’s Neuralink and is also the mother of four of Musk’s children.

The lawsuit, filed by Musk in 2024, argues that OpenAI moved away from its original charitable purpose after receiving billions of dollars from Microsoft. Musk claims the company effectively became tied to Microsoft’s commercial interests instead of serving the public good.

Microsoft has invested more than $13 billion in OpenAI since 2019 and supplies the computing power behind products such as ChatGPT and Copilot through its Azure cloud platform.

Musk is seeking $150 billion in damages and wants the money directed to OpenAI’s charitable arm. He is also pushing for Altman’s removal and wants the company’s for-profit structure dissolved.

Court proceedings have also revealed challenges between OpenAI’s founders and executives over control of the company, its rapid growth and the race to develop artificial general intelligence, often called AGI.

Some witnesses told the court that the company reaching AGI first could gain enormous economic and political influence worldwide.

The case also reveals Musk’s competition with OpenAI. His own artificial intelligence company, xAI, has expanded rapidly and merged with SpaceX in 2026 in a deal that reportedly valued the combined business at about $250 billion.

During the trial, it also emerged that Musk tried to settle with OpenAI president Greg Brockman shortly before proceedings began. According to testimony, Musk warned that Altman and Brockman could become “the most hated men in America.”

Microsoft has been working towards matching all of its hourly electricity use with renewable energy purchases within the next five years.

That goal, set in 2020, stood out at the time because it went beyond annual offsets and focused on real-time energy use. Now, people familiar with internal discussions say the company is weighing whether to delay or drop it.

The discussion comes as Microsoft spends heavily on infrastructure to support artificial intelligence. Like Amazon and Alphabet, it is building large data centres to run services such as Copilot and its Azure cloud platform.

These facilities require vast amounts of electricity, and demand is rising faster than earlier projections suggested.

Some of the newer sites under development are expected to draw several gigawatts of power. To put that in context, one gigawatt can supply roughly 750,000 homes in the United States. Meeting that level of demand with renewable sources alone is proving difficult, especially within tight timelines.

Energy supply is now a practical concern. Renewable projects take years to plan and build. By contrast, natural gas plants and nuclear facilities can be brought online more quickly, and companies are turning to them to avoid delays.

Microsoft has already taken steps in that direction. In 2024, it reached an agreement with Constellation Energy to help restart a unit at the Three Mile Island nuclear plant in Pennsylvania. The deal shows how the company is balancing its climate targets with immediate energy needs.

The pressure is not limited to Microsoft. Across the sector, emissions have continued to rise despite public commitments to cut them. That gap is drawing attention from regulators and investors, who are watching closely as companies expand their AI operations.

For now, Microsoft has not commented publicly on the reported review. What is clear is that the scale of AI is changing earlier assumptions. The company set one of the most ambitious clean energy goals in the industry. Whether it can still meet it on time is now uncertain.

It is central to the continent’s future, serving as the most powerful engine to drive inclusive growth, create jobs, and enhance global competitiveness in this era.

It expands access to opportunity beyond geography for Africa’s population, improves productivity across sectors, strengthens public service delivery, and enables countries to leapfrog legacy constraints rather than replicate them.

In effect, the digital economy is no longer a standalone sector, it is the foundation upon which Africa’s economic resilience, regional integration, and sustained prosperity will be built.

However, fully realising these gains depends not only on private-sector innovation, but critically on the effectiveness and efficiency of the public systems that underpin economic activity.

The analog bottleneck in a digital economy

Across Africa, core economic and administrative processes, from business registration and tax administration to land transactions and licensing, are mediated through government systems.

Yet in many countries, these systems remain manual, paper-based, or only partially digitised, with new technologies layered onto legacy workflows that have not fundamentally evolved.

The result is that digitisation, absent deeper institutional reform, risks reinforcing the very inefficiencies it seeks to resolve.

Fragmented platforms, inconsistent data standards, and limited interoperability across agencies introduce friction across the economy, slowing business activity, increasing transaction costs, and undermining trust in public institutions.

This underscores a central reality: digital government is fundamentally a governance challenge, not a technology one. Progress depends on strong institutional capacity, anchored in change management, cybersecurity, sound platform architecture, and sustained public sector ownership.

Where this foundation is constrained, digital programmes often produce ineffective outcomes: systems misaligned with current realities, dependency on fragmented solutions, and platforms that fail to endure beyond initial implementation.

Unlocking potential through digitization

Nigeria has demonstrated strong potential to emerge as a leading digital economy on the continent, underpinned by over 154 million internet users and a dynamic innovation ecosystem.

It has been reported that Artificial Intelligence alone is projected to deliver up to $136 billion in productivity gains across four major African markets by 2030, with Nigeria accounting for approximately 43 percent of this value.

This trajectory is reinforced by a resilient startup ecosystem that continues to attract significant capital, securing $410 million in 2024, representing 18.6 percent of Africa’s total funding, and exceeding $555 million in 2025, most significantly in fintech and digital service delivery.

Sustaining this momentum depends on the strength of public‑sector infrastructure. Nigeria has taken a decisive step forward with the introduction of the National Digital Economy and E‑Governance Bill, 2024, establishing the foundation for a more coherent and future‑ready digital ecosystem.

This legislation seeks to establish a unified legal and institutional framework for digital transformation, institutionalisation of electronic administrative processes, enhanced interoperability across government institutions, while establishing a secure foundation for public-sector data governance.

By embedding digital‑first operations into public administration, these reforms position government as an enabler of economic activity, reducing friction, strengthening transparency, and creating a more efficient, investment‑ready environment in which businesses can innovate and scale.

Global best practice demonstrates possibility

International experience shows that well‑governed public sector digitisation delivers measurable economic and institutional gains.

Estonia offers a leading example, having transformed public administration through the end‑to‑end digitalisation and automation of core government processes.

By building an integrated digital infrastructure, Estonia has created a more responsive public sector, improved citizen satisfaction, and strengthened trust in state institutions.

Today, the country saves an estimated 2 percent of GDP annually through digital signatures and streamlined public services, while integrating artificial intelligence to further enhance service delivery and operational efficiency.

India has similarly developed one of the world’s most advanced digital public infrastructures. The country’s information technology sector already contributes approximately 13 percent to the GDP, with projections for the digital economy reaching 20 percent by 2030. Through its Digital Public Infrastructure and India AI Mission, the country is scaling innovation by providing affordable AI compute capacity to entrepreneurs, researchers, and businesses at significantly reduced costs.

These examples underscore a clear lesson: digital public infrastructure must be built as a platform for long‑term transformation.

Success depends on sustained investment in people, institutions, and governance frameworks, not just technology systems.

This ensures that digitisation simplifies the relationship between citizens and the state rather than replicating legacy inefficiencies in digital form.

Public-Private partnerships enable the shift to e‑governance

The E‑Governance Bill establishes the policy foundation for a digitally enabled Nigeria, underpinned by execution partnerships that bring together technology, capability and global best practice.

Microsoft is advancing this transition through targeted investments in skills and building institutional capacity.

Initiatives such as Digital Skills Nigeria, the 3MTT programme, and strategic engagements with the Ministry for Communications, Innovation and Digital Economy, the National Information Technology Development Agency and the Nigeria Data Protection Commission, have been instrumental to the success of reaching over 6 million Nigerians with critical digital and AI skills and certifying over 150k to date.

Beyond skills, Microsoft is advancing the adoption of secure, scalable cloud infrastructure and interoperable digital platforms that underpin next-generation e-government systems. Through Microsoft Azure and its suite of AI-powered services, governments and startups are enabled to unlock the full value of data, driving more agile, inclusive, and citizen-centric public service delivery.

This is complemented by enterprise-grade security capabilities and a principled approach to Responsible AI, grounded in transparency, accountability, and governance frameworks that help build trust, strengthen resilience, and support the long-term sustainability of digital public services.

Ultimately, public sector digitisation is not a technology challenge alone; it is a leadership, governance and capability imperative enabled by technology.

Embedding digital‑first principles across public administration reduces economic friction, expands inclusion and positions Nigeria as a regional leader in Africa’s digital transformation journey.

Before now, Microsoft helped fund OpenAI’s rapid growth and used early access to its systems to build new tools across Windows, Office, Azure and other products.

Under the new agreement, Microsoft will remain OpenAI’s main cloud partner, but it will no longer have sole rights to host or distribute OpenAI technology.

That means OpenAI can now reach customers already using other cloud providers, instead of asking them to move to Microsoft Azure first.

Even so, OpenAI products are still expected to launch first on Azure unless Microsoft cannot, or chooses not to, support them.

Microsoft will also keep a non-exclusive licence to OpenAI’s intellectual property until 2032.

Another key change concerns money as Microsoft will no longer pay OpenAI a share of revenue from its own AI-related products. At the same time, OpenAI will continue paying Microsoft a 20% revenue share until 2030, though that amount now has a fixed upper limit.

Following the announcement, Microsoft shares fell about 1% in premarket trading on Monday, while Amazon and Alphabet, Google’s parent company, edged higher.

This means Microsoft has lost a strategic advantage, while its competitors now have a stronger path to offer OpenAI products through their own cloud services.

Still, aside from the exclusive deal, Microsoft is deeply tied to OpenAI. The software company owns about 27% of OpenAI, a stake estimated to be worth around $225 billion after OpenAI’s corporate restructuring last year.

The two companies have faced limitations in recent months, with reports in March saying Microsoft had considered going to court over a proposed $50 billion cloud deal involving Amazon and OpenAI that could have conflicted with earlier exclusivity terms.

There were also signs of stress inside OpenAI. Internal discussions reportedly revealed frustration that the old arrangement limited sales opportunities, especially among companies already committed to AWS or Google Cloud.

For OpenAI, the new structure provides room to expand faster and sell across more platforms.

For Microsoft, the deal removes exclusivity but secures long-term access to OpenAI technology while putting clearer limits on future payments.

For customers, it means more choice and less pressure to rely on a single cloud provider.