The partnership between OpenAI and

Microsoft

is based on the definition of a single, debatable term in the AI industry:

Artificial General Intelligence

(AGI). Reportedly, amidst ongoing negotiations, a crucial clause in the contract between the tech giants stipulates that once OpenAI's systems achieve

AGI

, it gains the power to limit Microsoft’s access to its future technology. Microsoft, a major investor and partner, is resisting this outcome, reports the Wall Street Journal.AGI is seen as the point where generative AI systems reach human-like intelligence. However, OpenAI CEO Sam Altman and other executives reportedly believe they are close to declaring their AI tools have reached this proficiency.Conversely, Microsoft CEO Satya Nadella has publicly expressed skepticism about the feasibility of reaching such a benchmark, highlighting a significant divergence of opinion within Silicon Valley's elite regarding the ultimate sophistication of cutting-edge AI, the report noted.Despite the internal tension, representatives from both companies offered a unified front in a statement: “We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing, and we are optimistic we will continue to build together for years to come.”

The report says that the companies are engaged to renegotiate their commercial agreement as OpenAI transitions to a for-profit entity, a move expected to unlock tens of billions of dollars in new funding for its AI advancements. Currently, Microsoft holds the power, requiring OpenAI to sell its AI software exclusively through Azure—a restriction few other AI developers face. Microsoft also maintains control over OpenAI’s intellectual property, integrating OpenAI’s latest technology across many of its core products.Sources familiar with the negotiations indicate that Microsoft is willing to accept an equity stake of approximately 35% in the new for-profit company. However, the fundamental disagreement over AGI continues to loom large over these talks.

OpenAI defines AGI as "highly autonomous systems that outperform humans at most economically valuable work," a milestone Altman suggests is "just around the corner." This contrasts sharply with Nadella's more critical stance. In a February tech podcast, Nadella dismissed self-proclaimed AGI milestones as "nonsensical benchmark hacking," comments that reportedly surprised some OpenAI officials who once viewed him as an "AGI believer."The agreement also outlines a higher tier of AGI, "sufficient AGI," which OpenAI can declare when its systems are financially capable of paying Microsoft its entitled future profits. This "sufficient AGI" designation, however, requires Microsoft's sign-off, at which point OpenAI would gain the right to license its technology to other cloud providers.