OpenAI risk factors Microsoft reliance, Elon Musk and xAI lawsuits

In a doc that resembles an IPO prospectus, OpenAI mentioned its shut ties with Microsoft may very well be a possible threat to its enterprise, telling buyers that the software program firm is chargeable for “a considerable portion of our financing and compute.”

OpenAI included sections titled “Dangers Associated to the Transaction” and “Dangers Associated to our Enterprise” in a monetary doc, considered by CNBC, that the corporate shared with potential buyers tied to its latest file financing spherical.

Final month, OpenAI introduced $110 billion in funding from strategic companions together with Amazon, Nvidia, and SoftBank. The corporate is working with banking companions to tack on an extra $10 billion value of commitments from a broader pool of buyers, based on sources acquainted with the deal. That a part of the spherical is on monitor to shut by the top March, mentioned the individuals, who requested to not be named as a result of the main points are confidential.

The dangers highlighted by OpenAI provide a style of what is to come back in its upcoming IPO submitting, as the corporate gears as much as make its public market debut as quickly as this 12 months. Except for its relationship with Microsoft, OpenAI cited dangers resembling its important capital expenditures, reliance on compute sources, ongoing litigation with Elon Musk’s xAI, and its uncommon construction as a public profit company, whose mum or dad is the OpenAI Basis.

OpenAI was based as a nonprofit analysis lab in 2015, however has skilled exploding industrial development since launching ChatGPT to the general public in late 2022. ChatGPT now boasts 900 million weekly energetic customers, and the corporate generated $13.1 billion in 2025 revenue. It was valued final month at $730 billion by buyers.

Microsoft has been a backer since 2019, years earlier than ChatGPT was launched, and obtained an early dedication from OpenAI to maneuver a few of its companies solely to Microsoft’s Azure cloud. In complete, Microsoft has invested $13 billion in OpenAI and, on the time of the AI firm’s restructuring in October, disclosed that its 27% diluted stake within the for-profit a part of the group was valued at $135 billion.

OpenAI mentioned within the doc circulated to buyers that its working outcomes will depend upon its skill to efficiently develop relationships with extra companions apart from Microsoft.

“If Microsoft modifies or terminates its industrial partnership with us, or if we’re unable to efficiently diversify our enterprise companions, our enterprise, prospects, working outcomes and monetary situation may very well be adversely affected,” the corporate wrote.

An OpenAI spokesperson mentioned in an announcement that, “This can be a customary authorized threat issue disclosure, unrelated to any potential IPO prospectus.”

“Comparable language has been in place for years,” the spokesperson mentioned. “Microsoft is and can stay a crucial long run companion.”

Although OpenAI and Microsoft have a decent bond, they’re more and more competing for customers within the burgeoning generative AI market.

In 2024, Microsoft added OpenAI to the checklist of opponents in its annual report, a roster that for years has included Amazon, Apple, Google and Meta. And final 12 months, OpenAI turned to other cloud providers, resembling CoreWeave, Google and Oracle, to satisfy heavy demand.

Geopolitical, authorized dangers

Whereas Microsoft warranted its personal headline within the threat disclosures, it is not the one firm that OpenAI named.

OpenAI famous that it requires monumental quantities of computational sources to coach and run its AI fashions, and {that a} international chip scarcity may very well be damaging.

Particularly, OpenAI mentioned that if chip provider Taiwan Semiconductor Manufacturing Company is affected by a regional battle, a nod to the rising tensions between China and Taiwan, OpenAI might face “extreme disruptions” to its provide chain.

OpenAI additionally mentioned it expects to proceed making important capital expenditures and commitments for “compute, information heart companies and associated infrastructure tasks,” alongside companions Microsoft, Nvidia, Advanced Micro Devices and Broadcom.

As of December, OpenAI mentioned it had roughly $665 billion in estimated compute spend commitments by 2030, based on the doc, including that “our compute necessities are dynamic and will develop considerably.”

Then there’s the lengthy and increasing checklist of authorized circumstances.

OpenAI cautioned buyers that ongoing litigation may very well be problematic as a result of copyright, patent and different mental property points, together with employment and contract disputes, privateness issues and different issues.

The corporate detailed three totally different lawsuits filed by OpenAI co-founder Musk or his firm, xAI, which is now a part of SpaceX after a merger final month. Musk left OpenAI in 2018, after attempting to persuade executives to merge it with Tesla. The 2 sides have been concerned in authorized battles since 2024, with the primary case anticipated to go to trial subsequent month.

OpenAI additionally mentioned that at the least 14 lawsuits have been filed in opposition to the corporate in California state and federal courts by ChatGPT customers or their members of the family, who blame the corporate’s merchandise for “psychological sickness resulting in suicide, dying or different harm.”

The primary wrongful dying lawsuit was filed in California final 12 months by Matt and Maria Raine, mother and father of 16-year-old Adam Raine, who died by suicide after ChatGPT reportedly inspired him to take his personal life. 

“We’re reviewing these circumstances, in gentle of our current industry-leading safeguards and extra efforts, in addition to the advanced nature of the causes of psychological sickness,” OpenAI mentioned within the doc.

One identify is notably absent from OpenAI’s threat components part: Sam Altman.

The CEO and co-founder has lengthy been the general public face of the corporate and has been mired in his share of controversy. In late 2023, Altman was suddenly ousted by the board, which mentioned it has misplaced confidence within the chief, however then reinstated him days later as a result of worker and investor strain.

OpenAI acknowledged within the doc that the “success of our firm and the operation of our enterprise depend on Key Personnel.” Neither Altman nor any of his colleagues are recognized.

In case you are having suicidal ideas or are in misery, contact the Suicide & Crisis Lifeline at 988 for assist and help from a skilled counselor.

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