Microsoft's AI revenue reportedly depends on OpenAI for 70 percent

According to a Bloomberg report, Microsoft's AI revenue largely comes from OpenAI. In the fiscal year to June, Microsoft booked $24.1 billion in sales through the AI company, which Bloomberg analysis estimates is roughly 70 percent of Microsoft's actual AI revenue in that period. CEO Satya Nadella had said in late March that the AI business was on track to exceed $37 billion annually. Under an agreement, OpenAI pays Microsoft for compute, model development costs, and a share of its revenues. This strong dependence explains Microsoft's recent rhetoric: the company, known for lock-in effects, has sided with open-weight models and warned against a few AI models that would absorb the value of entire industries. Nadella also criticized AI labs like OpenAI and Anthropic for resisting distillation, the practice of training AI models on outputs of proprietary models to create competitive models with less effort, allegedly used especially by Chinese manufacturers. Additionally, Microsoft increasingly deploys its own AI models in Office products.