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 could possibly be a possible risk to its enterprise, telling traders that the software program firm is chargeable for “a substantial portion of our financing and compute.”

OpenAI included sections titled “Risks Related to the Transaction” and “Risks Related to our Business” in a monetary doc, considered by CNBC, that the corporate shared with potential traders tied to its latest document financing spherical.

Last month, OpenAI introduced $110 billion in funding from strategic companions together with Amazon, Nvidia, and SoftBank. The firm is working with banking companions to tack on a further $10 billion value of commitments from a broader pool of traders, in accordance with sources aware of the deal. That a part of the spherical is on monitor to shut by the top March, mentioned the folks, who requested to not be named as a result of the small print 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 yr. Aside from its relationship with Microsoft, OpenAI cited dangers akin to its important capital expenditures, reliance on compute assets, ongoing litigation with Elon Musk’s xAI, and its uncommon construction as a public profit company, whose guardian is the OpenAI Foundation.

OpenAI was based as a nonprofit analysis lab in 2015, however has skilled exploding business progress 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 traders.

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 providers 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 traders that its working outcomes will rely on its means to efficiently develop relationships with further companions apart from Microsoft.

“If Microsoft modifies or terminates its commercial partnership with us, or if we are unable to successfully diversify our business partners, our business, prospects, operating results and financial condition could be adversely affected,” the corporate wrote.

An OpenAI spokesperson mentioned in an announcement that, “This is a standard legal risk factor disclosure, unrelated to any potential IPO prospectus.”

“Similar language has been in place for years,” the spokesperson mentioned. “Microsoft is and will remain a critical long term partner.”

Though OpenAI and Microsoft have a good 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 yr, OpenAI turned to other cloud providers, akin to CoreWeave, Google and Oracle, to fulfill heavy demand.

Geopolitical, authorized dangers

While Microsoft warranted its personal headline within the risk disclosures, it isn’t the one firm that OpenAI named.

OpenAI famous that it requires monumental quantities of computational assets to coach and run its AI fashions, and {that a} international chip scarcity could possibly be damaging.

Specifically, 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 “severe disruptions” to its provide chain.

OpenAI additionally mentioned it expects to proceed making important capital expenditures and commitments for “compute, data center services and related infrastructure projects,” 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 way of 2030, in accordance with the doc, including that “our compute requirements are dynamic and may expand significantly.”

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

OpenAI cautioned traders that ongoing litigation could possibly be problematic as a result of copyright, patent and different mental property points, together with employment and contract disputes, privateness considerations and different issues.

The firm 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 making an attempt to persuade executives to merge it with Tesla. The two sides have been concerned in authorized battles since 2024, with the primary case anticipated to go to trial subsequent month.

OpenAI additionally mentioned that not less than 14 lawsuits have been filed towards the corporate in California state and federal courts by ChatGPT customers or their members of the family, who blame the corporate’s merchandise for “mental illness leading to suicide, death or other injury.”

The first wrongful loss of life lawsuit was filed in California final yr 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 are reviewing these cases, in light of our existing industry-leading safeguards and additional efforts, as well as the complex nature of the causes of mental illness,” OpenAI mentioned within the doc.

One identify is notably absent from OpenAI’s risk factors 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 stress.

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

If you’re having suicidal ideas or are in misery, contact the Suicide & Crisis Lifeline at 988 for help and help from a educated counselor.

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