A significant contract dispute is putting the billion-dollar partnership between Microsoft and OpenAI at risk, all over a seemingly simple yet explosive question: Has OpenAI really achieved Artificial General Intelligence (AGI)?
Their agreement includes a clause stating that if OpenAI reaches AGI—a system that can outperform humans at most economically valuable tasks—the partnership can be ended. This clause was meant to prevent one company from monopolizing potentially world-changing technology, but defining and proving AGI has turned out to be incredibly difficult, leaving both sides locked in a high-stakes disagreement.
Experts suggest that any definition of AGI will ultimately be somewhat arbitrary. One idea is a new kind of Turing Test judged by everyday people. But for now, there’s no dependable way to verify AGI claims, making contract enforcement highly complicated. This legal battle lies in a strategic business play.
Microsoft, having invested over $10 billion in OpenAI, gets valuable code, early access to models, and a share of revenue as long as AGI isn’t officially recognized. Ending the partnership would mean losing those perks, but analysts believe Microsoft could manage just fine. It has its own AI models, the Azure cloud infrastructure, and collaborations with companies like Meta.
Critics argue that OpenAI’s original mission to “benefit humanity” has shifted toward becoming the most dominant AI company itself. Industry leaders warn that the real danger is that no one can agree on what AGI is, leaving society unprepared for how to regulate it. In the meantime, if you’re wondering whether we’ve truly reached AGI, here are some “real-world” tests that show we haven’t: AI still can’t fix your Outlook spam filter, stop those relentless promotional texts, answer press inquiries without human PR staff, or help a Tesla avoid potholes better than a human driver. And while AI can describe how to assemble a basketball hoop, it can’t build one. These everyday shortcomings highlight the gap between flashy demonstrations and genuine human-level intelligence.
As one AI researcher put it: Large language models merely mimic intelligence—they don’t genuinely learn from experience the way humans do. Despite all the buzz, AGI remains just out of reach.