Microsoft/OpenAI AGI argument unlikely to impact enterprise IT
There may be trouble in the industry’s biggest AI alliance, with a contract dispute about AGI threatening to topple the partnership between OpenAI and Microsoft.
The dispute, according to a report from The Information, involves a line in their contract that allows for the alliance to die once AGI (artificial general intelligence), the ability for genAI to replicate the capabilities of human thought, is achieved.
The problem is not with the lack of a precise AGI definition. It is that the concept is impossible to prove. OpenAI could deliver 100 proofs that show that they have achieved AGI and Microsoft could counter with 100 proofs that it hasn’t. Sentience is impossible to prove — or to disprove — with examples.
“They’re never going to settle on a definition of AGI that is intuitively satisfying to all. Any attempt to define AGI by looking at the internals of how the mind works often gets muddied by things like qualia and consciousness, which are notoriously difficult to pin down using an externally verifiable measure,” said John Licato, an associate professor at the University of South Florida’s Bellini College of Artificial Intelligence. “Instead, I expect they’re going to need to pick a somewhat arbitrary dividing line, purely tied to tests of performance. One example might be based on some consensus-based variant of the Turing Test in which a group of laypeople are asked to interact [blindly] with either humans or the AI, and they are then asked which they interacted with. If a large enough percentage of people are fooled, then the test is passed.”
Both sides want to exit the deal
Setting aside any AGI test, what is likely behind the argument is the desire by both parties to end the agreement, given how much has changed since the deal was struck in 2019.
The contractual AGI trigger appears to end any additional code-sharing, but there are no indications that Microsoft would have to surrender, or even stop using OpenAI code it had received before AGI was declared.
And analysts and enterprise IT executives agree that Microsoft is well-positioned to aggressively continue its genAI efforts without continuing to receive code from OpenAI.
Microsoft no longer needs OpenAI
Justin St-Maurice, a technical counselor at Info-Tech Research Group, said he doubts that ending the partnership would set Microsoft back in any serious way.
“Microsoft has its own models, a strong Azure ecosystem, and access to increasingly capable open-source LLMs. They don’t actually need OpenAI to deliver a successful product. Right now, the real bottleneck with Copilot isn’t the underlying model, but the rigid, rules-based implementation layered on top,” St-Maurice said. “Swapping out OpenAI with a different LLM won’t break an already weak user experience …. As LLMs are becoming commoditized, the magic lies in the integration, not the engine.”
St-Maurice had a strong reaction to one reference in The Information‘s story about the stated reason for the AGI deal killer clause during the original contract negotiations.
It said: “The idea behind the AGI contract provision is that Microsoft, as one of the world’s most powerful for-profit firms, shouldn’t get access to technology that might eventually help people colonize other planets or develop nuclear fusion. Doing so would go against OpenAI’s founding principle in 2015 to develop technology for the benefit of all of humanity, an idea that has roots in the beliefs of OpenAI founders, including CEO Sam Altman and Tesla CEO Elon Musk, who wanted to ensure the most powerful technologies didn’t end up in the hands of for-profit firms.”
OpenAI’s principles have changed since 2019
St-Maurice said that claim is rather absurd, given how OpenAI has not been acting at all like a non-profit.
“Sorry, how exactly is OpenAI sticking to its founding principles in 2025?” St-Maurice asked. “It’s hard not to wonder if OpenAI doesn’t want the world’s most powerful for-profit firms to have AGI technology because it would rather be the world’s most powerful for-profit firm with AGI technology.”
St-Maurice added: “They’re not doing this for humanity, and OpenAI has a lot of work to do to convince me otherwise. The rhetoric about ‘benefiting all of humanity’ rings a little hollow when Sam Altman is openly forecasting mass job displacement and a future where society becomes dependent on the technology class. It’s hard to see altruism when it also appears to conveniently consolidate control.”
Execs see little impact
Enterprise IT executives appeared to agree that even if the partnership dissolves, they will feel little to no impact.
Vinod Goje, the VP engineering manager at Bank of America, said Microsoft is well-positioned for a post-OpenAI model future. It has the cloud infrastructure, the enterprise relationships, and the financial firepower to pivot faster than most realize, he pointed out, stressing that he was speaking personally and not representing his employer. While losing exclusive access to OpenAI’s latest models would sting, they’ve got partnerships with Meta, their own research teams, and enough resources to acquire or develop alternatives.
“The real disruption isn’t whether Microsoft can survive without OpenAI. It’s that we’re essentially flying blind on the most consequential technology decisions of our lifetime,” he noted. “When you can’t even agree on what AGI looks like, how do you write contracts? How do you regulate it? How do you prevent it from being controlled by whoever gets there first? It’s a preview of the governance chaos coming if we don’t get serious about how AGI is defined, verified and shared. What this really reveals is the structural weakness in how we govern foundational technologies.”
Goje argued that the MS-OpenAI situation shows how unprepared the industry is for the implications of GenAI.
“The Microsoft-OpenAI standoff is a canary in the coal mine for the entire AI industry. We’re watching a $10 billion partnership potentially unravel over something as fundamental as ‘What is intelligence?’” Goje said. “This dispute is forcing the industry to confront an uncomfortable truth: we’re building the future without a roadmap. The companies that figure out governance frameworks first, not just the technology, will be the ones that actually shape what comes next.”
Another enterprise IT executive agreed.
“I don’t think there will be any material impact [if Microsoft and OpenAI split],” said Brian Phillips, VP of Macy’s technology, “especially if they can keep the code they have been using.”Microsoft/OpenAI AGI argument unlikely to impact enterprise IT – ComputerworldRead More