OpenAI and Microsoft's new open relationship
OpenAI and Microsoft reworked their partnership, ending Microsoft's exclusivity over OpenAI's IP and removing the AGI clause, while allowing OpenAI to use rival clouds like Amazon Bedrock. Meanwhile, China blocked Meta's $2B acquisition of AI startup Manus, and ex-DeepMind researcher David Silver launched a $1.1B lab aimed at building AI that learns from experience rather than training data.
Summary
The centerpiece story covers the renegotiated OpenAI-Microsoft partnership, which fundamentally reshapes the two companies' relationship. Microsoft loses its exclusivity over OpenAI's intellectual property and the controversial AGI clause has been removed. OpenAI is now free to ship products on any cloud infrastructure, including rival platforms like Amazon Bedrock. Microsoft, however, retains a revenue share arrangement through 2030 and Azure-first launch access through 2032. The deal also resolves Microsoft's reported lawsuit threat stemming from a $50B Amazon-OpenAI deal that had granted AWS exclusive rights to OpenAI's Frontier platform. Going forward, both companies' obligations are governed by calendar dates rather than the ambiguous milestone of an AGI announcement.
In a significant geopolitical development, China's National Development and Reform Commission blocked Meta's $2B acquisition of Manus, a Singapore-based AI startup with Chinese roots. Chinese authorities opened a probe in January into export-control and foreign-investment rules, ultimately directing both companies to unwind the deal. This occurred despite Meta claiming the two teams were already deeply integrated and the transaction had fully complied with applicable law. The move is seen as Beijing asserting that AI talent constitutes a national security asset, mirroring the type of export-control logic the U.S. applies to semiconductors.
Ex-DeepMind researcher David Silver launched a new London-based AI lab called Ineffable Intelligence, which raised $1.1B at a $5.1B valuation — Europe's largest seed round ever. Silver's approach deliberately avoids pre-training on human data, instead allowing agents to learn from experience in simulations, which he calls a 'superlearner' model. He characterized human training data as 'a kind of fossil fuel' and framed his reinforcement-learning-based approach as a renewable alternative. Silver built his reputation leading DeepMind's reinforcement learning team, producing landmark models including AlphaGo, AlphaZero, AlphaStar, and AlphaProof.
The newsletter also covers several smaller stories: the Elon Musk vs. OpenAI trial beginning jury selection, analyst reports of OpenAI developing a smartphone with MediaTek and Qualcomm, Adobe launching a public beta of its Firefly AI Assistant, Alibaba releasing its Happy Horse video model to top leaderboard rankings, and Taylor Swift filing federal trademarks to protect her likeness and voice from AI deepfakes.
Key Insights
- The newsletter argues that removing the AGI clause from the Microsoft-OpenAI deal benefits both parties — OpenAI gains cloud flexibility while Microsoft locks in a predictable six-year revenue stream untethered from an ambiguous technical milestone.
- The author frames China's blocking of Meta's Manus acquisition as Beijing applying export-control logic — previously reserved for hardware like chips — to AI talent and software startups, signaling a significant escalation in AI as a geopolitical battleground.
- David Silver characterizes human training data as 'a kind of fossil fuel,' arguing that experience-based reinforcement learning represents a 'renewable' alternative that allows models to 'learn and learn and learn forever' without relying on finite human-generated data.
- The newsletter notes that Ineffable Intelligence joins AMI Labs and Recursive Superintelligence in raising substantial capital on the thesis — aligned with Yann LeCun's position — that large language models are a dead end and that alternative architectures are needed to reach AGI.
- The author suggests that OpenAI CRO Denise Dresser explicitly stated the old Microsoft exclusivity terms 'limited' OpenAI's ability to serve enterprise customers, implying the prior deal was a material commercial constraint rather than merely a structural formality.
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