According to a report by The Wall Street Journal, tensions between OpenAI and Microsoft continue to escalate. The disagreement stems from OpenAI's desire to transition from a non-profit organization to a full-fledged commercial entity.

However, Microsoft has been reluctant to approve this initiative as it could significantly impact the corporation's interests. Specifically, it might require renegotiating Microsoft's rights to access OpenAI's intellectual property, which is a key part of their current agreement.

Microsoft's lack of approval has caused frustration among OpenAI's leadership, with some executives accusing Microsoft of anti-competitive business practices. Should formal allegations emerge, this could trigger a federal antitrust investigation into the partnership terms between the two companies.

The conflict became particularly apparent after OpenAI acquired startup Windsurf for $3 billion. Windsurf had been developing an AI-powered code generation tool that directly competes with GitHub Copilot. Under the current agreement, Microsoft gains access to all of OpenAI's intellectual property, including Windsurf's technologies. However, OpenAI appears unwilling to let Microsoft benefit from Windsurf's developments.

It remains unclear whether the companies will reach a compromise. Microsoft is reportedly demanding a larger stake in OpenAI's proposed Public Benefit Corporation structure than OpenAI is willing to offer.

The situation is becoming critical for OpenAI. The company must complete its transition to commercial status by the end of 2025. Failure to do so would require OpenAI to repay the $20 billion raised during its latest funding round.

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