Microsoft (MSFT, Financials) and OpenAI are at odds over a contractual clause that could deny Microsoft access to artificial general intelligence, or AGI, once OpenAI achieves it; according to The Information, Microsoft wants that provision removed, but OpenAI is holding firm.

The disagreement threatens to strain one of the most significant partnerships in the AI sector; Microsoft has invested billions in OpenAI since 2019 and provides the cloud infrastructure for its AI tools through Azure.

Despite the conflict, both companies issued a joint statement to Reuters, saying they have a long-term, productive partnership and are optimistic about future collaboration; behind the scenes, however, sources say OpenAIs transition into a public-benefit corporation is on hold due to unresolved terms.

OpenAIs AGI clause, if enforced, would limit Microsoft's ability to commercialize the most advanced form of AI built by its closest partner; that risk appears increasingly material as OpenAI races toward AGI milestones while maintaining control of its governance and mission.

This article first appeared on GuruFocus.