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OpenAI CEO Sam Altman and Microsoft CEO Satya Nadella at OpenAIβs DevDay in November 2023. (GeekWire File Photo / Todd Bishop)
OpenAI generated $10 billion in revenue for Microsoft in the quarter ended Sept. 30, about 11% of the Redmond companyβs total revenue, according to its quarterly filing Wednesday.
The amount is up sharply. In the fiscal year that ended in June, Microsoft recorded $24.1 billion in revenue from its business with OpenAI, or about $6 billion a quarter on average.
That $10 billion surpasses some of Microsoftβs longest-running businesses. Xbox brought in $5.4 billion in the quarter. Search and advertising, which includes its Bing search engine, generated $6.6 billion. Windows licenses sold through PC makers, along with Surface and other Microsoft devices, brought in $3.6 billion.
The total covers revenue-sharing payments from OpenAI, as well as other business between the companies, such as OpenAIβs use of Azure to train and run its AI models. Microsoft didnβt say how much came from each, or how much of Azureβs growth came from OpenAI.
Microsoft has begun disclosing its revenue from OpenAI because its stake of about 24% makes OpenAI a βrelated partyβ under accounting rules, requiring it to report the business they do with each other.
Microsoft first reported the number in its annual report in July, as a full-year total. This is the first time it has given a quarterly figure.
The original AI alliance: Microsoft first invested in OpenAI in 2019, eventually committing $13 billion, and became its exclusive cloud provider. ChatGPT ran on Azure when it launched in late 2022.
The companies have loosened their ties since then. OpenAI restructured as a public benefit corporation in October 2025, and Microsoft gave up its right of first refusal to supply OpenAIβs computing capacity. OpenAI committed to buy an additional $250 billion in Azure services. An April 2026 agreement gave OpenAI broader freedom to use other cloud providers.
OpenAI has also agreed to keep sharing revenue with Microsoft through 2030.
In addition, Microsoft sells access to OpenAIβs models to business customers through its Azure OpenAI Service, and the models became the foundation for its Copilot products, putting Microsoft at the front of the generative AI boom. That revenue comes from Microsoftβs own customers, so it isnβt part of the $10 billion.
Many customers, not a few: Asked by Bernstein Research analyst Mark Moerdler whether AI growth on Azure was coming from big businesses or AI-native companies, Microsoft CEO Satya Nadella didnβt mention OpenAI.
He said he doesnβt want Azureβs AI business to depend on a few big customers, and that broad adoption by businesses is just getting started.
Nadella described it as βa decade-long thing,β and contrasted it with relying on βfour customers who buy a lot of capacity from youβ to show a few quarters of growth. That, he said, is βnot a business as far as Iβm concerned.β
He added that Microsoft has large customers who want to buy capacity, βand as long as the pricing is right, we may sell them some. If not, we will be patient.β
Later in the call, Goldman Sachs analyst Gabriela Borges brought up the fact that OpenAI made up 11% of revenue. Nadella didnβt address the number but praised OpenAIβs latest models and said customers are increasingly mixing models from different companies, or training their own.
He cited Microsoftβs tools for routing each task to whichever AI model handles it best. If you use AI coding agents, Nadella said, you want Anthropic and OpenAI βto compete for your workload, not like once a quarter, but for every task.β
New risk language: Microsoft also expanded a warning in its quarterly filing about the risks of depending on outside AI providers. The company builds products such as Copilot on AI models from outside companies, including OpenAI and Anthropic. It now says it has βlimited visibility into or control overβ how those models are designed, trained, secured and tested.
Without naming OpenAI or Anthropic, the same section notes that some of these AI partners are also βsignificant customers of Azure,β and that the benefits Microsoft expects from those relationships βmay not be realized or sustained.β It says those partners could change how much they buy, and that Microsoft itself may change how it allocates scarce data center capacity or prices it.
Microsoft is an investor in both companies. According to its latest filing, it owns about 24% of OpenAI, down from about 25% in June and about 27% after OpenAIβs restructuring a year ago, and has put $12.0 billion of a promised $13.0 billion into the company.
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An Anthropic engineering manager says he has stopped using traditional coding interviews because AI can now outperform candidates on the kinds of programming challenges they typically contain. "There's no more point in giving you a little React challenge than there is in quizzing people about assembly; Claude is now better at both," said Felix Rieseberg in a blog post. "Our most impactful builders are successful regardless of how good they are at these tests." The Register reports: "I don't think the coding interview is going to come back," said Rieseberg. "It's easy to get sentimental given how many copies of 'Algorithms and Data Structures' were bought in hopes of unlocking good jobs and a better future -- or how the death of the coding interview is another milestone in software engineering reaching a new level of abstraction."
At the same time, he's not certain what will replace it. "I'm probably not the only manager trying to figure out how to interview for people who build well with AI," Rieseberg wrote. "I haven't quite gotten there yet -- but I'm scanning resumes and portfolios for little prototypes that exhibit taste, empathy, and principled thinking. If you have figured out something better, I'd love to hear how."
In a response posted to social media, Jaana Dogan, principal engineer at Google, said: "I'm not doing a ton of coding interviews nowadays but I'd be interested to interview how people use coding agents," she wrote. "That itself gives me more signals about candidates' coding skills."
"We are not seeing tech companies abandon skills assessments widely across the industry -- at least not yet," added Nicole Bachaud, labor economist at ZipRecruiter. "In fact, based on our October 2026 Employer Survey of 1,500 employers, we see the tech industry (Information sector specifically) is actually the most likely to test for skills, with 62.5 percent of employers requiring formal skill tests on initial applications."
"The change at Anthropic might be reflecting a shift away from technical skills towards more human, soft skills," said Bachaud. "As AI becomes fully capable of writing code, tech employers may be pivoting away from rote technical testing and heavily toward human-centric soft skills." She argues that while AI may be able to code well, it can't replace critical thinking. "A staggering 61.5 percent of Information employers now report that 'critical thinking' is a primary skill lacking in today's candidate pool," she said.
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Microsoft said it made $10 billion in revenue from commercial arrangements with OpenAI, including revenue-sharing payments, in the quarter ending September 30. It underscores the still-enormous financial dependency of the partnership.