Microsoft is reportedly weighing legal action against OpenAI and Amazon over a $50 billion deal that could weaken its exclusive cloud partnership with the ChatGPT developer.

This was revealed in a Financial Times report citing sources familiar with the matter.

The dispute centres on a series of agreements signed last month between OpenAI and Amazon, including one that names Amazon Web Services as the exclusive third-party cloud provider for Frontier, OpenAI’s enterprise platform for building and deploying AI agents.

The report noted that the core issue is whether OpenAI can make Frontier available through Amazon Web Services without violating its long-standing agreement with Microsoft, which mandates that its models be accessed via Microsoft’s Azure cloud.

Microsoft executives are said to view the move as inconsistent with the intent, if not the exact terms, of their partnership with OpenAI.

Sources say talks are ongoing, with both parties aiming to resolve the matter before Frontier’s official launch.

Microsoft has been a major backer of OpenAI, investing $1 billion in 2019 and an additional $10 billion in early 2023, a move that helped deepen the integration of OpenAI’s models across Microsoft’s products and cloud services.

However, a revised, non-binding agreement signed in 2024 allowed OpenAI to pursue partnerships with other leading tech firms, including Amazon, Nvidia and SoftBank.

Despite these expanded ties, both Microsoft and OpenAI have maintained that Azure remains the exclusive cloud provider for OpenAI’s core models, with Microsoft retaining exclusive licensing rights to key intellectual property.

While Microsoft has reaffirmed its support for OpenAI’s broader ecosystem partnerships, it stressed that Frontier will remain hosted on Azure, signalling limits to how far OpenAI can extend its collaboration with Amazon Web Services.

Even as a potential legal dispute looms with its key partner, OpenAI is also contending with another case related to its partnership with Microsoft.