Negotiating Your OpenAI Agreement: 7 Clauses You Must Push Back On

Negotiating Your OpenAI Agreement: 7 Clauses You Must Push Back On

Global enterprises diving into OpenAI’s services must tread carefully when reviewing the contract. A successful OpenAI contract negotiation hinges on scrutinizing a few critical clauses that can significantly impact risk, cost, and control.

This brief executive overview highlights seven key contract areas, from data use to pricing, where enterprise buyers should push back and secure better terms.

Clause 1: Data Privacy and Security

OpenAI’s platform thrives on data, so data privacy and security provisions are paramount.

Out of the box, OpenAI’s standard terms may allow some data usage for model improvement, which is a non-starter for sensitive enterprises.

Push for contract language that explicitly forbids OpenAI from using your data for any purpose beyond delivering the service.

All data you input or that is generated for you should remain confidential and your property, with robust safeguards in place.

For example, insist on a data processing addendum (DPA) that spells out encryption standards, access controls, and data residency requirements (critical for regions with strict regulations).

In highly regulated sectors (finance, healthcare, etc.), verify that OpenAI will comply with industry rules – if you handle health data, get a HIPAA Business Associate Agreement.

A real-world case underscores this: Samsung briefly banned employees from using ChatGPT after some engineers unintentionally exposed source code via the AI.

The lesson? Negotiate terms so your company’s data never becomes OpenAI’s training material or a security liability.

Require immediate notification of any breach and the right to have data deleted on request.

In short, treat data in the OpenAI contract like crown jewels – lock it down tight with clear, enterprise-friendly terms.

Clause 2: Intellectual Property Ownership

Generative AI blurs the lines of content creation, so it’s essential to clarify who owns what.

OpenAI’s default agreement is surprisingly favorable here: typically, you retain ownership of both your inputs and the outputs the AI produces for you.

Still, it’s wise to get this in writing in plain language. Ensure the contract states that all prompts, data, and content you provide remain yours, and that all AI-generated outputs are also your property.

This ensures you can use the AI’s responses freely, whether it’s code, text, designs, or other material, without fearing later claims from OpenAI.

Also, limit any license you grant to OpenAI: they may need a temporary license to use your input data for processing, but it should be narrowly defined (only to perform the service, without any additional rights).

Importantly, owning the output doesn’t automatically mean it’s safe to use; AI can inadvertently produce content that resembles copyrighted or sensitive material.

OpenAI’s contracts often disclaim responsibility for the content of their output, even placing the onus on the user to ensure it’s lawful. As an enterprise customer, push back by seeking warranties or indemnities for IP issues in outputs.

For instance, ask OpenAI to warrant that it isn’t knowingly delivering plagiarized text or infringing code.

While vendors rarely provide broad guarantees in this area, raising the issue can lead to compromises such as assistance or specific filters to mitigate risk.

The bottom line: secure your rights to use AI-generated content and protect yourself from IP surprises.

Clause 3: Usage Restrictions and Compliance

Every OpenAI agreement will include a section on acceptable use and compliance. These clauses spell out what you can and cannot do with the AI.

Many are common sense: don’t use the AI for illegal activities, to generate malware, or to try to reverse-engineer the model. However, some restrictions could inadvertently limit legitimate business plans.

For example, OpenAI often prohibits the use of its outputs to create competing AI models. If your strategy involves using OpenAI’s results to improve your machine learning systems, clarify the boundaries: ensure the contract permits internal analytics or fine-tuning with outputs, as long as you’re not building a GPT-4 clone.

Another compliance aspect: sector-specific regulations. If you’re in a regulated industry, confirm the contract acknowledges those needs. OpenAI’s standard terms might forbid certain data types (like personal health information, unless a special addendum is in place).

Negotiate any needed exceptions or assurances, e.g., OpenAI agreeing to sign a GDPR data processing agreement, or committing to assist with compliance audits or inquiries. Also, consider ethical use clauses.

Your organization may have policies on bias, fairness, or transparency. If so, ask for contractual commitments around responsible AI use – such as the ability to use OpenAI’s content filtering tools or a promise of cooperation if you need to audit outputs for bias.

By addressing usage restrictions up front, you ensure the AI can be used as intended without breaching either OpenAI’s rules or legal requirements in your field. Make any grey areas black-and-white in the contract to avoid headaches later.

Clause 4: Model Transparency and Change Management

OpenAI’s technology evolves rapidly, which is exciting but can be risky for enterprises if not managed. A crucial clause to negotiate is one related to model transparency and updates.

Out of the box, OpenAI might not inform customers when it makes significant changes (like deploying a new model version or adjusting algorithms), which could alter how the AI behaves.

Insist on a provision that you will be notified in advance of major updates or model changes. This way, you won’t be caught off guard if, say, GPT-4 is swapped out for GPT-5 halfway through your contract.

Ideally, negotiate a chance to test new versions before they’re applied in production for you – this is key for ensuring the AI’s outputs remain acceptable for your needs.

Transparency also means requesting any documentation that OpenAI can share about the model’s capabilities and limitations.

For enterprise deals, OpenAI has started sharing “system cards” or model info sheets (e.g., documenting known biases or performance metrics). Ensure the contract obligates them to provide these materials and update them over time.

Additionally, secure access to logs or audit trails of your AI usage. Having logs of prompts and outputs can help explain or troubleshoot outcomes vital for internal audits and answering questions like “Why did the AI respond that way?”

Some vendors might resist deep transparency (since the AI is a black box by nature), but even basic commitments can help. For example, knowing the training data cutoff or being promised a monthly performance review report adds confidence.

Suppose OpenAI were to attempt a gag clause about discussing model issues publicly, push back.

In that case, you must be free to evaluate and report on the AI’s performance internally (and to regulators) without breaching the contract.

In summary, demand as much transparency as possible: it builds trust and gives you leverage to manage the AI’s impact on your business.

Clause 5: Indemnification (Who Carries the Risk?)

Indemnification is your safety net in the contract, it determines who pays if a third party sues or a legal claim arises from the use of the AI.

OpenAI’s standard contract includes some indemnities (notably, they often cover intellectual property infringement claims related to their technology).

As a negotiator, treat IP indemnification as non-negotiable: OpenAI should defend and hold you harmless if their model or its outputs violate someone’s IP rights.

For instance, if a news publisher alleges that the AI’s answer to your users contains copyrighted paragraphs from their articles, OpenAI should step in, handle the legal defense, and cover costs or settlements.

Ensure this indemnity isn’t narrowly written – it should cover claims related to the AI model itself, as well as the training data or outputs.

Beyond IP, consider other risks: what if the AI outputs defame someone, or produces unlawful content that gets your company in trouble? Vendors are often reluctant to indemnify those scenarios, since user prompts and unpredictable influence the output.

However, it’s worth raising these concerns. At a minimum, push for a clause that if the OpenAI service itself (not your use of it) causes a legal issue, e.g., a product liability-like situation where the AI malfunctions or produces a harmful result due to OpenAI’s error, then OpenAI will cover you.

Also, be prepared for mutual indemnification: OpenAI will likely ask you to indemnify them for any breaches on your part (for example, if you use the service in an illegal manner or feed it data you weren’t authorized to).

This is standard, but confine your obligations to scenarios where you did wrong (violating the contract or laws), not an open-ended catch-all.

Ensure the contract stipulates that OpenAI can only claim indemnity from you if you are responsible for the issue by breaching the terms.

In summary, share the risk fairly: OpenAI should stand behind its technology, and you behind your usage. A solid indemnification clause aligned with that principle is critical before you sign.

Clause 6: Service Levels and Performance

For enterprise buyers, an OpenAI service might support mission-critical applications – meaning downtime or slow performance is not an option.

Thus, pushing back on the contract’s service level agreement (SLA) terms is a must.

If the initial contract draft lacks concrete SLAs, insist on adding them. Uptime commitment is key: define the minimum uptime (e.g., 99.9% monthly uptime, which is roughly less than an hour of downtime per month).

OpenAI’s free or standard services come with no guarantees, but for enterprise deals, they can offer uptime assurances and 24/7 support.

Nail down what happens if they fail to meet the SLA – typically, you should receive service credits or even the right to terminate if downtime is chronic.

Performance metrics might be harder to guarantee (AI response times can vary), but at least ensure you get priority capacity. Enterprise agreements often promise priority processing or a dedicated instance so your queries don’t sit in a queue.

Support response time is another negotiable item: ensure there’s an obligation that critical issues (e.g., the AI is completely unresponsive) get immediate attention with defined response windows.

Without an SLA, you’re exposed. Imagine your customer-facing app, which relies on OpenAI, goes down, and you have no recourse while waiting for general support. Don’t accept a vague “best effort”; get specifics in writing, even if it’s in a separate service description or support policy.

Also, clarify maintenance windows or updates: if OpenAI plans downtime for upgrades, you should get advance notice outside of peak hours. In essence, treat OpenAI like any cloud service provider – demand enterprise-grade reliability.

If OpenAI is confident in their platform (and wants big-business clients), they should agree to reasonable service level commitments.

This clause is all about ensuring the tech lives up to its promise day in and day out, or compensating you if it doesn’t.

Clause 7: Pricing and Cost Controls

Generative AI services introduce a new kind of cost model that can surprise even seasoned procurement teams.

OpenAI’s pricing can be usage-based (e.g., per million tokens) or subscription-based (like a flat fee for ChatGPT Enterprise seats).

When negotiating, focus on pricing clarity, caps, and flexibility.

First, demand full transparency: the contract or order form should list every applicable rate (for each model, feature, or add-on) and any volume discount structure in place.

No hidden fees.

Volume commitments can be your friend or foe. If your usage is large, committing to a certain volume (monthly spend or tokens) can win you significant discounts – OpenAI has been known to offer better rates at high volumes.

However, avoid overcommitting in year one; instead, try to negotiate a ramp or a true-up so you pay for what you use.

It’s wise to include a clause that allows for adjustments to commitments or the carryover of unused credits if adoption is slower than expected. Conversely, protect against runaway costs by implementing a monthly spend cap.

For example, “OpenAI will not charge more than $X per month without written approval.” This ensures a rogue script or unexpected spike doesn’t blow your budget. Additionally, request real-time usage monitoring and alerts.

The contract should ideally obligate OpenAI to provide usage dashboards and alert you if you’re, say, exceeding 80% of your monthly quota.

Another key point is price lock and changes.

OpenAI’s standard terms might allow them to change pricing on short notice (e.g., 30 days).

That uncertainty is unacceptable for enterprises. Negotiate a fixed price for at least the initial term (e.g., “No price increases during the first 12 months”).

If they must have the ability to change pricing, insist on a longer notice period and the right to terminate or renegotiate if the new prices aren’t agreeable.

Also, consider including a price protection clause: if OpenAI reduces its list prices or offers promotions to others, you should also receive the benefit.

AI services are rapidly getting cheaper (OpenAI has slashed some model prices by 75% in the past), so ensure you’re not left paying legacy rates.

Finally, structure the renewal carefully, cap any renewal price increase (for example, no more than a single-digit percentage or tied to an inflation index).

By tackling pricing terms head-on, you transform the contract from an open checkbook to a predictable investment.

The goal is to harness OpenAI’s capabilities without budget surprises – making cost as controllable as any other enterprise IT service.

Key Clause Pitfalls and Pushback Tactics

To summarize the critical points, the table below outlines each major clause, the risk if left unchecked, and how you should push back:

Recommendations

• Prepare Your Team Early: Bring together IT, procurement, legal, and finance before talks with OpenAI. Align on your technical requirements, risk tolerance, and budget so you know what terms you need.
• Do Your Homework: Read OpenAI’s standard Services Agreement thoroughly and mark the clauses that raise concerns (data use, IP, liability). Also, review any public case studies or benchmarks of similar AI deals to inform your stance.
• Prioritize Your “Red Lines”: Identify the 5–7 clauses (like the ones above) that are most critical to fix. Be ready with alternative wording or specific asks for each. For instance, have a preferred language ready that says “OpenAI will not use Customer’s data for any purpose other than providing the service.”
• Leverage Comparisons: If you’re also evaluating competitors (such as Azure OpenAI or other AI vendors), use that as leverage. Share (carefully) that you have options and that you’re looking for the best overall terms – this can prompt OpenAI to be more flexible on contract points or pricing.
• Ask for Enterprise Protections: Don’t be shy about requesting additional protections, even if they aren’t included in the boilerplate. Examples include: the right to audit usage logs for verification, an obligation for OpenAI to assist with compliance documentation, or even training for your staff on safe AI usage. You won’t get everything, but if you don’t ask, you definitely won’t get it.
• Negotiate Pricing in Detail: Push for volume discounts and ensure that any minimum spend commitments are realistic. Also, request protections like a “most favored pricing” clause (if permissible) to ensure you’re not paying more than others. Structure payments to avoid big upfront fees unless necessary – for instance, monthly or quarterly billing can help manage cash flow and reduce risk.
• Simulate and Scenario-Plan: Before finalizing the deal, run through best- and worst-case scenarios. What if your usage doubles overnight? What if a new regulation hits your industry? Ensure the contract has provisions (or at least does not prevent you) to handle those situations – whether it’s scaling up capacity or terminating if needed due to compliance changes.
• Get it in Writing: Verbal assurances from sales reps (“we never look at customer data” or “we typically give a heads-up on changes”) mean nothing unless they are included in the contract. If something was promised during negotiations, incorporate it into the written agreement or an addendum.
• Plan for Ongoing Governance: Treat the OpenAI solution as an ongoing vendor relationship, not a one-time purchase. Set up regular check-ins with OpenAI after signing – for example, quarterly business reviews to discuss performance, new features, and any emerging risks. This keeps both sides accountable and engaged in ensuring the partnership’s success.
• Maintain Leverage Post-Signature: Even after the ink is dry, keep options open. Avoid overly long auto-renewal periods without review. Keep an eye on the AI market – if better models or deals emerge in the future, you want the ability to consider them. This mindset will also prepare you well when the time comes to renew or renegotiate with OpenAI.

Checklist: 5 Actions to Take

1. Inventory Your Needs and Risks: Start by listing how your enterprise plans to use OpenAI’s services. What data will you send? What outputs do you expect? Which regulations apply? Identify the worst-case risks (data leak, bad output, downtime) for your use cases. This inventory will frame the clauses you need to focus on.

2. Review the Draft Contract Line-by-Line: Obtain OpenAI’s proposed agreement (including any order form, DPA, or usage policy). Have your team dissect it. Highlight any clause that seems broad, one-sided, or unclear. Common flags include data usage rights, IP terms, confidentiality, indemnities, SLA, liability cap, and price terms.

3. Define Your Counterproposals: For each flagged clause, write down the change you want. Be as specific as possible – e.g., “Insert: OpenAI will provide at least 60 days’ notice before any material service change” or “Replace liability cap from 12 months’ fees to 24 months and carve out breaches of confidentiality.” Prioritize these asks into must-haves versus nice-to-haves.

4. Negotiate Methodically: When you engage with OpenAI’s sales or contracting team, communicate your key concerns early. Use a polite but firm tone: you’re excited about the technology but need these terms to protect your business. Walk through the contract in order, addressing each of your counterpoints as you go. If needed, get on calls with OpenAI’s legal counsel to hash out technical points (like data handling procedures or security standards). Document all agreed changes in writing (email summaries work, but ultimately ensure the contract text changes).

5. Final Check and Sign-Off: Before signing, do one more thorough read of the revised contract. Ensure all negotiated points are correctly inserted – no loose ends or “to be discussed” placeholders remaining. Have all stakeholder teams (legal, security, finance, and IT) formally sign off to confirm that their concerns are addressed. Once signed, organize an internal briefing for your team on the final terms: everyone should be aware of the dos and don’ts (e.g., if the contract prohibits certain uses, ensure users are informed). Then, implement internal monitoring and governance aligned with the contract (such as setting up those usage alerts or scheduling quarterly review meetings with OpenAI). With this checklist, you’ll enter the OpenAI partnership with eyes open and protections in place.

FAQ

Q1: Are OpenAI’s standard contracts negotiable for enterprises?
A: Yes. OpenAI’s click-through terms are non-negotiable for self-serve users, but enterprise customers (especially those with significant spend or strategic projects) can negotiate. Expect some pushback – OpenAI may have preferred clauses they rarely change – but most big clients manage to tweak terms around data use, security, SLAs, and pricing. It helps to show why a change is needed (e.g., “Our company policy prohibits any supplier from reusing our data, so we need this clause.”). In short, everything is potentially negotiable if the deal is important enough, so it’s worth trying to improve any terms that worry you.

Q2: How can we ensure our data is safe and not used to train AI models?
A: By contract and by architecture. Contractually, include a clause that forbids OpenAI from using or retaining your data except to serve your requests. OpenAI’s enterprise offerings already pledge not to train on customer data by default – your job is to formalize that promise in writing. Additionally, sign a Data Processing Addendum to confirm your security commitments. On the technical side, you can opt out of data logging when using OpenAI’s API, and for ChatGPT Enterprise, data is not stored long-term. Internal policy is also key: train your employees not to input sensitive information unless necessary, even with a strong contract in place. With the right terms and practices, you can confidently utilize OpenAI while maintaining the protection and privacy of your data.

Q3: What if the AI gives wrong or harmful outputs? Who is accountable?
A: This is a gray area, which is why negotiation is vital. Generally, your company will be accountable to your end-users for anything you deploy, but you want OpenAI to share responsibility for the technology’s flaws. OpenAI’s standard contract disclaims a lot of liability for AI output – the service is offered “as is.” In negotiation, you should seek two things: (1) Improved warranty or performance clauses, perhaps stating that the service will perform by documentation and that OpenAI will fix issues that materially deviate from expected behavior; and (2) Indemnification for third-party claims, especially if the output infringes on someone’s rights (e.g., IP infringement or defamation). In practice, you should also mitigate risk on your side: use human oversight for high-stakes tasks and implement filters to catch problematic content. While you may not get OpenAI to take full blame for a rogue AI answer, you can contractually ensure they stand behind their product to a reasonable extent, and you manage how AI outputs are used to avoid costly mistakes.

Q4: How do we handle regulatory and compliance requirements with OpenAI’s service?
A: Treat OpenAI as you would any critical IT vendor in a regulated context. If you have data residency requirements (e.g., personal data must remain on EU servers), discuss this upfront – OpenAI may offer regional hosting or an on-premise solution in some cases. Ensure the contract includes cooperation clauses for compliance: OpenAI should commit to assisting with audits or providing information in response to regulatory requests. For privacy laws like GDPR, ensure that OpenAI signs the necessary agreements (they have standard GDPR addenda, but verify their adequacy for your specific needs). If you’re in finance or healthcare, explicitly confirm that using OpenAI won’t violate rules – sometimes it means configuring the usage (for example, not inputting full patient records into the AI unless you have that special BAA in place). OpenAI’s enterprise team has likely encountered these needs, so push them to articulate how they meet, for example, SOC 2, ISO 27001, or other relevant certifications. Ultimately, you want the contract to state that OpenAI will comply with all applicable laws and industry standards and will assist you in maintaining compliance. That way, if a regulator knocks on your door, you have vendor commitments to back you up.

Q5: What if we want to terminate the contract or switch to another AI provider?
A: Plan an exit strategy from the start. Check the contract’s termination clauses. Many SaaS contracts auto-renew or lock you in for a set term (e.g., one year). Negotiate flexibility where possible: for instance, the right to terminate for convenience with notice (even if you have to pay for the remainder of the term, it may be worth having an option). At a minimum, ensure you can get out if OpenAI materially breaches the agreement or fails to meet key obligations (like an SLA). Also, consider an exit assistance clause: if you leave, will OpenAI give you an export of any data or model configurations that were uniquely yours? While OpenAI doesn’t exactly “hold” your data (beyond prompts/outputs), it’s good to confirm there’s no lingering content and that any user accounts can be deleted. If you plan to migrate to another provider or an in-house solution, try to align the end of your OpenAI term with that transition to avoid double-paying. In summary, negotiate like you might leave one day – even if you love the service – because this mindset will ensure you don’t end up trapped or compromised if circumstances change.

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