Microsoft is weighing legal action against OpenAI over a reported $50 billion deal with Amazon that could challenge its existing partnership with the AI company, according to a Financial Times report.
The report stated that the dispute centres on whether Amazon Web Services (AWS) can offer OpenAI’s new product, known as Frontier, without breaching contractual obligations that require access to OpenAI’s models to be routed through Microsoft’s Azure cloud.
Recently, Amazon committed up to $50 billion in OpenAI, making it the largest investor in the company’s latest funding round. The investment is structured in phases, with an initial $15 billion upfront and a further $35 billion tied to conditions or milestones.
As part of the deal, AWS will become the exclusive third-party cloud distribution provider for OpenAI Frontier, the company’s enterprise platform for building and managing AI agent teams.
Microsoft believes the arrangement may violate the “spirit”, if not the letter, of its agreement with OpenAI.
People familiar with the matter, as quoted in the report, Microsoft executives have warned they could pursue legal action if the contract is breached.
The report added that Amazon and OpenAI maintain they are structuring the deal to remain compliant, including through technical workarounds. However, Microsoft disputes the feasibility of such approaches.
Microsoft, in a comment to the publication, said “We are confident that OpenAI understands and respects the importance of living up to [its] legal obligation.”
However, a person familiar with OpenAI’s position on the issue is reported to “believe its plans with Amazon are compatible with its deal with Microsoft.”
Microsoft had served as OpenAI’s sole cloud provider since its initial $1 billion investment in 2019, with Azure powering everything from model training to commercial APIs.
However, that exclusivity was partially relaxed following a 2025 restructuring of the partnership, which allowed OpenAI to seek additional compute capacity and to collaborate with other cloud providers for certain workloads.
Under the revised terms, all application programming interface (API) access, effectively the commercial gateway through which companies integrate OpenAI’s models into products, must still be routed through Azure.
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