As of March, TikTok was paying Microsoft almost $20 million per month to access OpenAI’s models, according to a source reported by The Information.

This significant payment accounted for nearly a quarter of the revenue generated by Microsoft’s rapidly growing cloud division.

Microsoft’s cloud AI business was projected to earn $1 billion in annual revenue. However, TikTok’s parent company, ByteDance, is developing its own large language model (LLM), which might reduce its reliance on OpenAI’s capabilities in the future.

Last year, ByteDance was reported to be using OpenAI’s technology to create its own LLM, a practice considered inappropriate in the AI community and a direct violation of OpenAI’s terms of service. OpenAI’s terms clearly state that its model outputs cannot be used to develop competing AI models.

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As a result, OpenAI suspended ByteDance’s account to investigate potential violations of its developer license. ByteDance responded by stating it was using the technology only to a very limited extent.

Microsoft, which sells OpenAI access to ByteDance, has a similar policy against using model outputs for developing competing products. Additionally, Microsoft has a significant investment in OpenAI, including a multibillion-dollar deal making it OpenAI’s exclusive cloud provider and spending several hundred million dollars building a supercomputer to power ChatGPT.

In its Q4 2024 earnings report, Microsoft revealed a 29 percent growth in Azure revenue, slightly below the 30 to 31 percent previously projected. CFO Amy Hood stated that for Q1 2025, Microsoft expects around 28–29 percent Azure revenue growth.

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The evolving relationship between TikTok, ByteDance, OpenAI, and Microsoft highlights the complexities of AI development and the significant investments involved in cloud AI services.