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Microsoft's AI revenue relies on OpenAI for 70 percent, Bloomberg reports

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Microsoft's AI revenue relies on OpenAI for 70 percent, Bloomberg reports

New financial disclosures reported by Bloomberg show that most of Microsoft's AI revenue comes from a single source: OpenAI. The figure given is $24.1 billion for the fiscal year ending in June, which works out to roughly 70 percent of Microsoft's total AI revenue for that period. In late March, CEO Satya Nadella said the AI business was on track to top $37 billion annually. Under the companies' agreement, OpenAI pays Microsoft for computing power, for model development costs, and hands over a share of its revenue.

That level of dependence, the report suggests, helps explain a shift in Microsoft's public messaging. A company long associated with vendor lock-in has been promoting open-weight models and warning against a handful of proprietary AI systems capturing the value of entire industries. Nadella has also criticized AI labs, including OpenAI and Anthropic, for opposing "distillation," the practice of training new models on a proprietary model's outputs to build competitors more cheaply. Chinese manufacturers have reportedly been especially aggressive with this technique. At the same time, Microsoft has been steadily replacing third-party AI with its own models across its Office product line.

Key facts

  • OpenAI accounted for about 70 percent of Microsoft's total AI revenue in the fiscal year ending in June, or $24.1 billion, per a Bloomberg report.
  • In late March, Nadella said Microsoft's AI business was on track to top $37 billion annually.
  • OpenAI pays Microsoft for computing power, model development costs, and a share of its revenue under their agreement.
  • Nadella has criticized OpenAI and Anthropic for opposing "distillation," training models on a rival's outputs to build competitors more cheaply; Chinese manufacturers have reportedly used the technique aggressively.
  • Microsoft has been steadily swapping in its own AI models across Office products even as it promotes open-weight models publicly.

Why it matters

The disclosure quantifies something long suspected: Microsoft's AI revenue is not diversified, it is concentrated in one partner. A company that built its platform business on vendor lock-in is now, on this reading, dependent on OpenAI for the bulk of its own AI income, which reframes its public advocacy for open-weight models and against proprietary AI concentration as self-interest as much as principle.

Who it affects

Microsoft and OpenAI investors, who now have a clearer read on how tightly the two companies' financial fates are tied together; Anthropic and other proprietary model makers, whom Nadella named in his criticism of anti-distillation stances; and enterprise customers of Microsoft Office, where Microsoft's own models are gradually replacing third-party AI.

How to use it

For anyone assessing Microsoft's AI strategy or its public statements on open models and industry concentration, this figure is the context to weigh them against: a company that earns roughly 70 percent of its AI revenue from one partner has a direct financial interest in that partner's competitive position, and in reducing platform dependence elsewhere, such as inside its own Office products.

How solid is it

The $24.1 billion and 70 percent figures come from a Bloomberg report as relayed by The Decoder; the underlying disclosures themselves are not detailed further in this account, and no calendar year is attached to "the fiscal year ending in June" or to Nadella's "late March" remark. The $37 billion figure is directly attributed to Nadella. The terms of the OpenAI-Microsoft revenue share are described only in general terms, not quantified.

Risks and caveats

Several details are asserted without support in this account: the exact percentage or terms of the revenue share OpenAI pays Microsoft are not given, no specific Office products are named as having received Microsoft's own AI models, no Chinese manufacturers are identified in connection with distillation, and no date or venue is given for Nadella's remarks criticizing OpenAI and Anthropic on the topic.