MSFT hosting deal

Here are the MSFT terms. $60MM of compute for $10MM, and input from us on what they deploy in the cloud. LMK if you have any feedback.

Sam

Microsoft/​OpenAI Terms[2]

Microsoft and OpenAI: Accelerate the development of deep learning on Azure and CNTK

This non-binding term sheet (“Term Sheet”) between Microsoft Corporation (“Microsoft”) and OpenAI (“OpenAI”) sets forth the terms for a potential business relationship between the parties. This Term Sheet is intended to form a basis of discussion and does not state all matters upon which agreement must be reached before executing a legally binding commercial agreement (“Commercial Agreement”). The existence and terms of this Term Sheet, and all discussions related thereto or to a Commercial Agreement, are Confidential Information as defined and governed by the Non-Disclosure Agreement between the parties dated 17 March, 2016 (“NDA”). Except for the binding nature of the foregoing confidentiality obligations, this Term Sheet is non-binding.

Deal Purpose
OpenAI is focused on deep learning in such a way as to benefit humanity. Microsoft and OpenAI desire to partner to enable the acceleration of deep learning on Microsoft Azure. Towards this goal, Microsoft will provide OpenAI with Azure compute capabilities at a favorable price that would enable OpenAI to continue their mission effectively.

Deal Business Goal
Microsoft
· Accelerate deep learning environment on Azure
· Attract a net new audience of next generation developers
· Joint PR and evangelism of deep learning on Azure
OpenAI
· Deeply discounted GPU compute offering over the deal term (3 years) for use in their nonprofit research: $60m of Compute for $10m
· Joint PR and evangelism of OpenAI on Azure

Parties (Legal entities) Microsoft OpenAI

Proposed Deal Execution Date September 19, 2016

Proposed Deal Commencement Date Same as deal execution date

Legal Authoring Microsoft holds the pen.

Deal Term 3 years

Engineering Terms
- Compute: Microsoft will provide OpenAI GPU core hours of compute at the agreed upon price for OpenAI’s workloads to run in Azure.
- Geographic Location: Geographic location decisions will be at Microsoft discretion depending on capacity and availability. Microsoft will also be responsible for sharing the deployment strategy and timelines with OpenAI.
- SLA: For all Virtual Machines that have two or more instances deployed in the same availability set, Microsoft guarantee OpenAI will have virtual machine connectivity to at least one instance at least 99.95% of the time. Microsoft will be held accountable to the SLA’s provided on https://​​azure.microsoft.com/​​enus/​​support/​​legal/​​sla/​​virtual-machines/​​v1_2/​​

- Evaluation, Evangelization, and Usage of CNTK v2, Azure Batch and HD-Insight: OpenAI will evaluate CNTK v2, Azure Batch, and HDInsight for their research, provide feedback on how Microsoft can improve these products. OpenAI will work with Microsoft to evangelize these products to their research and developer ecosystems, and evangelize Microsoft Azure as their preferred public cloud provider. At their sole discretion, and as it makes sense for their research, OpenAI will adopt these products

- Ramp: Microsoft and OpenAI will work together for creating a ramp plan that balances capacity per clusters. The initial timeline for ramp is a minimum of 30 days that will be augmented by Microsoft’s capacity expansion plans in the coming months.

- Capacity: OpenAI will be given an allocation of capacity in the preview cluster (located in US South Central) for short term requirements and Microsoft will provide quota access to the subsequent K80 GPU clusters that go live in the 4th quarter of 2016 with the intention of more capacity in Q1 2017 (calendar year).

Financial Terms
· Financial Terms: Microsoft will offer $60m worth of List Compute (including GPU) at a deep discount which results in a price of $10m to be paid by OpenAI over the course of the deal. In the event OpenAI consumes less than $10m worth of Azure compute, OpenAI will be responsible for paying the balance between the used amount and $10m at the end of the deal term to Microsoft.

Marketing & PR Terms
Microsoft and OpenAI commit to jointly evangelizing deep learning capabilities on Azure as agreed upon by both parties.
- Ignite: Announce the partnership at Microsoft’s Ignite event with executives (Sam Altman from OpenAI and Satya Nadella from Microsoft) from both parties inaugurating the collaboration
- PR: Microsoft and OpenAI will work together to issue a joint press release about the partnership including any materials such as blog posts and videos.

This actually made me feel nauseous. It sucks and is exactly what I would expect from them.

Evaluation, Evangelization, and Usage of CNTK v2, Azure Batch and HD-Insight: OpenAI will evaluate CNTK v2, Azure Batch, and HD-Insight for their research, provide feedback on how Microsoft can improve these products. OpenAI will work with Microsoft to evangelize these products to their research and developer ecosystems, and evangelize Microsoft Azure as their preferred public cloud provider. At their sole discretion, and as it makes sense for their research, OpenAI will adopt these products

Let’s just say that we are willing to have Microsoft donate spare computing time to OpenAI and have that be known, but we want do any contract or agree to “evangelize”. They can turn us off at any time and we can leave at any time.

I had the same reaction after reading that section and they’ve already agreed to drop.

We had originally just wanted space cycles donated but the team wanted more certainty that capacity will be available. But I’ll work with MSFT to make sure there are no strings attached

We should just do this low key. No certainty either way. No contract.

ok will see how much $ I can get in that direction.

Microsoft is now willing to do the agreement for a full $50m with “good faith effort at OpenAI’s sole discretion” and full mutual termination rights at any time. No evangelizing. No strings attached. No looking like lame Microsoft marketing pawns. Ok to move ahead?

Fine by me if they don’t use this in active messaging. Would be worth way more than $50M not to seem like Microsoft’s marketing bitch.