adam121 – stock.adobe.com
Microsoft rebuts analyst claims that its changing relationship with OpenAI forces it to scale back datacentre expansion in the US and Europe.
Microsoft has refuted claims that its decision to cancel or defer at least two gigawatts of datacentre projects, in the US and Europe, is indicative of a “failing relationship” with OpenAI.
US Analyst TD Cowen published a note of research on 26 March 2025 indicating that the public cloud giant has cancelled and deferred lease agreements for datacentres in the US and Europe which would have increased their compute capacity by at minimum 2GW. TD Cowen said that Microsoft’s refusal to support OpenAI incremental training workloads was the reason for the cancellation of its plans.
TD Cowen said that the relationship between the two companies was “fraying” after Microsoft confirmed, in January 2025, that the exclusivity cloud-hosting deal between the two firms was renegotiated.
A Microsoft blog post, A letter dated 21 January, 2025confirmed that OpenAI had made “a large Azure commitment”which included “changes in the exclusivity of new capacity and moving to a Microsoft-first refusal model”.
Microsoft has the first refusal to host OpenAI workloads. OpenAI reserves the right to build capacity with other partners in case Microsoft is unable to meet its needs. Microsoft has issued a statement in Computer Weekly to refute TD Cowen’s view of the situation and to reiterate the strong working relationship between OpenAI and the company.
Microsoft has stated that it is “well-positioned” in order to meet the increasing demand for its services, thanks to its “significant investments” made to date.
A Microsoft spokesperson said that “Last but not least, we added capacity in excess of any previous year”referring to the decision to scale back its datacentre expansion plans. “While we may strategically adjust or pace our infrastructure in certain areas, we will continue growing strongly in all regions.
This allows us to allocate resources and invest in growth areas for our future. Our plans to invest over $80bn in infrastructure this financial period remain on track, as we continue to grow and meet customer demand at a record rate. Microsoft has been a part of OpenAI since 2019. The two firms have previously stated that they are working towards a common goal to “responsibly progress artificial intelligence research”while democratising technology and making it available to everyone.
Around that same time, Microsoft announced details of a reworked hosting arrangement with OpenAI. OpenAI also revealed details of a $500bn effort by the company to expand the infrastructure supporting its services. Softbank, Oracle MGX, and OpenAI are listed as equity funders of the initiative. Microsoft is listed on the list as a technology provider.
A Microsoft spokesperson stated that OpenAI is a great partner. We are committed to driving AI forward, driving innovations, and making cutting edge models available to our customers and partner.
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