Amazon-OpenAI $50B Deal Draws Legal Response from Microsoft (MSFT)

Microsoft MSFT -0.14% ▼ is weighing legal action against Amazon AMZN +1.63% ▲ and OpenAI over a reported $50 billion cloud deal, according to a Financial Times report. The dispute centers on whether the agreement could break Microsoft’s long-standing cloud partnership with OpenAI.

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Amazon-OpenAI Deal Raises Questions for Microsoft

The issue comes from a recent deal that makes Amazon Web Services (AWS) the exclusive third-party cloud provider for OpenAI’s enterprise platform, Frontier, which is used to build and run AI agents. This has raised concerns at Microsoft, which has invested heavily in OpenAI and relies on Azure to host its models.

According to the report, Microsoft believes the move could go against the spirit of its agreement, which gives Azure a central role. “We will sue them if they breach it,” a person familiar with Microsoft’s position said, adding that the company is confident in its contract.

Microsoft has been one of OpenAI’s earliest backers, investing $1 billion in 2019 and another $10 billion in 2023. The two also signed updated terms last year, allowing OpenAI to partner with other companies while keeping Azure as a key platform.

What’s at Stake for Microsoft?

The main question is whether OpenAI can offer its Frontier platform through AWS without affecting Microsoft’s rights. While the companies say Azure will still host OpenAI’s core models, the Amazon deal raises doubts about how much flexibility OpenAI really has under that agreement.

For Microsoft, the risk is not just about one deal. It is about maintaining its position at the center of OpenAI’s ecosystem as the company expands its partnerships.

Talks are ongoing, and no legal action has been taken yet. But Microsoft has made it clear that it is ready to act if it believes the agreement is being broken.

Which Stock Is a Better Buy?

We used TipRanks’ Comparison Tool to compare Amazon and Microsoft to see which one analysts favor. Below is a screenshot for reference. According to analysts, both stocks carry a Strong Buy consensus, though Microsoft offers the higher implied upside at about 48.7%, compared with roughly 30% for Amazon.

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