The tech world drama of the week comes via a new report about growing tensions in the relationship between OpenAI and its major backer Microsoft, and today we learn that OpenAI has just landed a $200 million government contract.

OpenAI's contract is with the US Department of Defense, and the work — which doesn't seem too well defined — would be complete by July 2026, as Reuters is reporting.

In text pertaining to the contract, the Pentagon said, "Under this award, the performer will develop prototype frontier AI capabilities to address critical national security challenges in both warfighting and enterprise domains."

OpenAI previously said that it would be collaborating with defense technology startup Anduril to build AI systems for “national security missions,” and Anduril landed a $100 million contract with the Defense Department back in December, as CNBC notes.

In a blog post published Monday, OpenAI says that the new contract falls under the newly launched OpenAI for Government, an initiative "focused on bringing our most advanced AI tools to public servants across the United States."

"We're supporting the US government's efforts in adopting best-in-class technology and deploying these tools in service of the public good," the company says. "Our goal is to unlock AI solutions that enhance the capabilities of government workers, help them cut down on the red tape and paperwork, and let them do more of what they come to work each day to do: serve the American people."

Meanwhile, OpenAI appears to be in some kind of power struggle with Microsoft, its chief backer and the provider of cloud computing power. As the Wall Street Journal reported Monday, tensions between the companies "are reaching a boiling point," and OpenAI may even be considering a "nuclear option" to get out from under Microsoft's heel.

That nuclear option would involve a complaint to the feds that Microsoft is engaging in anti-competitive practices — something that Microsoft famously faced a federal trial about over two decades ago.

At issue, per the Journal, is OpenAI's ongoing process of becoming a public benefit corporation, something that it has to complete by the end of the year. And Microsoft reportedly wants to own a larger stake in OpenAI when that process is complete than OpenAI wants to give it.

As Gizmodo notes, "Were OpenAI to actually turn on Microsoft, the resultant corporate battle could be one for the ages — a truly ugly mud fight between two of the most influential companies in Silicon Valley."

You may recall that Microsoft stepped in to poach OpenAI CEO Sam Altman when he was briefly ousted by his own board in late 2023. The details behind that drama are going to be the subject of a movie now in development at Amazon MGM Studios.

Previously: Former Apple Designer Jony Ive's Secretive Startup Working on AI Hardware of Some Kind, OpenAI Acquiring It

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