OpenAI and Microsoft Reach Preliminary Agreement on Partnership Revision

OpenAI and Microsoft sign preliminary deal to revise partnership terms

On Thursday, OpenAI and Microsoft announced they have signed a non-binding agreement to revise their partnership, marking the latest development in a relationship that has grown increasingly complex as both companies compete for customers in the AI market and seek new partnerships for growing infrastructure needs. "Microsoft and OpenAI have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership," the companies wrote in a joint statement. "We are actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety." The announcement comes as OpenAI seeks to restructure from a nonprofit to a for-profit entity, a transition that requires Microsoft's approval, as the company is OpenAI's largest investor with more than $13 billion committed since 2019. The partnership has shown increasing strain as OpenAI has grown from a research lab into a company valued at $500 billion. Both companies now compete for customers, and OpenAI seeks more compute capacity than Microsoft can provide. The relationship has also faced complications over contract terms, including provisions that would limit Microsoft's access to OpenAI technology once the company reaches so-called AGI (artificial general intelligence) -- a nebulous milestone both companies now economically define as AI systems capable of generating at least $100 billion in profit. In May, OpenAI abandoned its original plan to fully convert to a for-profit company after mounting pressure from former employees, regulators, and critics, including Elon Musk. Musk has sued to block the conversion, arguing it betrays OpenAI's founding mission as a nonprofit dedicated to benefiting humanity. The company instead announced a modified approach where the nonprofit board would retain control while converting its for-profit subsidiary into a public benefit corporation. Under this revised structure, the nonprofit would become the largest shareholder with a stake worth more than $100 billion, according to OpenAI chairman Bret Taylor's announcement in May. Thursday's MOU with Microsoft suggests the companies are working to align on this modified restructuring plan. High stakes tied to restructuring The restructuring still requires approval from attorneys general in California and Delaware, who continue to scrutinize the proposed conversion. A coalition of charitable institutions has also called on regulators to halt the plan. Microsoft stated in a January blog post that key elements of the partnership remain in place through 2030, including access to OpenAI's intellectual property, revenue-sharing arrangements, and exclusivity on OpenAI's APIs. That agreement introduced a right of first refusal model for compute capacity, replacing Microsoft's previous exclusivity as OpenAI's sole cloud provider. The rapidly changing relationship between two formerly steadfast partners follows the AI industry's explosive growth from experimental research labs to multi-hundred-billion-dollar infrastructure investments over the past six years since the two companies first made an investment deal. OpenAI has diversified its infrastructure partnerships, including participation in the $500 billion Stargate Project with Oracle and SoftBank, while Microsoft has expanded Azure to host competing models from Meta, xAI, and DeepSeek. Despite efforts by both companies to reduce mutual dependence, their fortunes remain deeply intertwined. Microsoft disclosed in recent earnings that Azure has become a $75 billion annual business, with significant contributions from OpenAI-related services.

OpenAI secures Microsoft's blessing to transition its for-profit arm | TechCrunch

OpenAI announced Thursday that it reached a non-binding agreement with Microsoft, its largest investor, to convert its for-profit arm into a public benefit corporation (PBC). The transition, should it be cleared by state regulators, could allow OpenAI to raise additional capital from investors and, eventually, become a public company. In a blog post, OpenAI's Board Chairman Bret Taylor said that OpenAI's non-profit would continue to exist and retain control over the startup's operations. Under the non-binding agreement, OpenAI's non-profit would obtain a stake in the company's PBC worth upwards of $100 billion. "Microsoft and OpenAI have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership," the companies said in a joint statement. MOUs are not legally binding, but aim to document each party's expectations and intent. "We are actively working to finalize contractual terms in a definitive agreement," the joint statement added. The development seems to mark an end to months of negotiations between OpenAI and Microsoft over the ChatGPT-maker's transition plans. Under their current deal, Microsoft is supposed to get preferred access to the startup's technology and be OpenAI's primary provider of cloud services. However, ChatGPT is a much larger business than when Microsoft first invested in the startup back in 2019, and OpenAI has reportedly sought to loosen the cloud provider's control as part of these negotiations. Taylor says that OpenAI and Microsoft "continue to work with the California and Delaware Attorneys General" on the transition plan, implying that the deal still needs regulatory approval before it can take effect. Representatives for California and Delaware attorneys general did not immediately respond to TechCrunch's request for comment. Tensions between OpenAI and Microsoft over these negotiations reportedly reached a boiling point in recent months. The Wall Street Journal reports that Microsoft wanted control of Windsurf, the AI coding startup that OpenAI had planned to acquire earlier this year, while OpenAI fought to keep the startup's technology independent. However, the deal fell through, and Windsurf's founders were hired by Google, and the rest of its staff was acquired by Cognition. In Elon Musk's lawsuit against OpenAI, the startup's for-profit transition is also a major flash point. Lawyers representing Musk in the lawsuit -- which at its core accuses Sam Altman, Greg Brockman, and the company of abandoning its nonprofit mission -- have tried to surface information related to Microsoft and OpenAI's negotiations over the transition. Musk also submitted an unsolicited $97 billion takeover bid for OpenAI earlier this year, which the startup's board promptly rejected. However, legal experts noted at the time that Musk may have raised the price of OpenAI's non-profit stake. Notably, Taylor says the non-profit's stake in OpenAI PBC is larger than what Musk offered.

OpenAI and Microsoft reach an understanding over ongoing contract negotiations -- but AGI clause remains an uncertainty

OpenAI is hoping for a $500 billion valuation in the future to help fund its non-profit and major data center investments. Microsoft and OpenAI have signed a non-binding deal over the ongoing terms in their contract, clearing the way for OpenAI to begin its for-profit restructuring efforts before an expected IPO, Reuters reports. Crucially, this brings OpenAI closer to being able to receive $10 billion in investment funds from Japanese investment firm Softbank. This investment was contingent on a deal between Microsoft and OpenAI being reached before the end of the year. However, despite the buoyancy of the announcement, it is "non-binding," and both firms are still said to be working out the fine details, suggesting the sticking points from earlier negotiations have yet to be fully hashed out. With OpenAI now on the hook for a $300 billion purchase of computing power from Oracle, it will need to raise an astronomical amount of capital over the next few years, moving beyond the terms of the original Microsoft deal, and its non-profit structure is likely a key component of that. An official statement from both companies reads: "OpenAI and Microsoft have signed a non-binding memorandum of understanding for the next phase of our partnership. We are actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety." Microsoft was an early investor in OpenAI, funding the business with a billion dollars in 2019. It increased its stake in OpenAI with a $10 billion investment in 2023, and secured 49% of all future profits of OpenAI's for-profit business until the original investment was covered. It also locked OpenAI down to only using Microsoft's Azure servers for its services, and OpenAI offered Microsoft unique insights into the design and construction of OpenAI's LLM models, like the recently released (and maligned) GPT-5. Microsoft appeared to ease those restrictions a little this year, helping to facilitate the $500 billion Stargate program, which aims to build data centers in the USA, though Microsoft was also a part of the deal. There was also the recent Oracle compute deal, which seemingly wouldn't have been possible if Microsoft had held OpenAI to its original pledges. But, one area where Microsoft has reportedly held firm on is OpenAI seeking a clause that would effectively cut off access to OpenAI's model data if, or when, it develops Artificial General Intelligence (AGI), or a general intelligence AI of human-equivalent intelligence. Both companies recognize what a watershed moment in AI development that would be, and want to protect their interests accordingly. That's likely the major sticking point in the as-yet hashed-out negotiations taking place between the two firms. Both companies are reportedly still attempting to finalize the terms of their ongoing agreement, which is set to remain valid until 2030. In the near term, OpenAI is now free to begin its corporate restructuring. Although originally founded as a non-profit, it has since moved to become a for-profit company, maintaining two branches of the business. Therefore, OpenAI wants to restructure itself to make fundraising more efficient and effective. This will eventually allow it to go public, which could potentially raise billions. OpenAI is reportedly hoping for a valuation of $500 billion dollars if it goes public. Under the terms of its Microsoft agreement, such an offering would see the non-profit arm receive $100 billion. It's not clear how much of the company Microsoft would own, however. Part of the contract negotiations is also said to involve converting Microsoft's profit-sharing clause into an equity stake. OpenAI describes the non-profit as one of the most well-funded philanthropic organizations in the world, and would work to ensure that AI and specifically, AGI, technologies "benefits all of humanity." The non-profit has reportedly already launched a call for applications for a $50 million grant initiative to support non-profits and community-led efforts to improve "AI literacy and public understanding, community innovation, and economic opportunity." While that goes on in the background, though, OpenAI will need to continue to nail down the terms of its Microsoft deal. The non-binding nature of it does raise the specter of it all falling through, though both companies seemingly have a strong interest in ensuring that does not happen. Any eventual deal will be subject to regulatory approval from the attorneys general in California and Delaware, too. While this is a positive step towards OpenAI securing the kinds of funds it needs for all of its mammoth investment and developmental plans, it is far from certain if all of that will come to pass. OpenAI needs this deal, and we can expect it to employ all efforts to get it signed in the next few months.

OpenAI's $100 Billion Pivot Blurs Its 'Mission' Further

Months of protracted negotiations between OpenAI and Microsoft Corp. have finally led to... an agreement about an agreement that will help the AI upstart carve a path towards greater independence. "We are actively working to finalize contractual terms," OpenAI said Thursday night, referring to a sweeping plan to restructure its powerful nonprofit arm. Remember the one that fired Chief Executive Sam Altman back in November 2023, and gave Microsoft executives a collective heart attack? It's being given an equity stake worth over $100 billion that will redraw the company's future.

OpenAI and Microsoft agree key terms in contract renegotiation

OpenAI and Microsoft have announced progress in the high-stakes talks to renegotiate their multibillion-dollar partnership, opening the way for the ChatGPT maker's restructuring to allow an eventual public listing. OpenAI said on Thursday that it had determined the non-profit which controls the AI start-up would own an equity stake in the restructured business worth at least $100bn. "Microsoft and OpenAI have signed a nonbinding memorandum of understanding for the next phase of our partnership," the companies said in a statement on Thursday. "We are actively working to finalise contractual terms in a definitive agreement. "Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety." The companies have been renegotiating a contract covering Microsoft's access to the start-up's technology, intellectual property and revenue for months, and an agreement is an essential precursor to OpenAI converting a part of its business to a for-profit.

OpenAI reaches new agreement with Microsoft to change its corporate structure

OpenAI has reached a new tentative agreement with Microsoft and said its nonprofit, which technically controls its business, will now be given a $100 billion equity stake in its for-profit corporation. The maker of ChatGPT said it had reached a new nonbinding agreement with Microsoft, its initial and still largest backer, "for the next phase of our partnership." The announcements on Thursday include a few details about these new arrangements. OpenAI's proposed changes to its corporate structure have drawn the scrutiny of regulators, competitors and advocates concerned about the impacts of artificial intelligence. OpenAI was founded as a nonprofit in 2015 and its nonprofit board has continued to control the for-profit subsidiary that now develops and sells its AI products. It's not clear whether the $100 billion equity stake the nonprofit will get as part of this announcement represents a controlling stake in the business. California Attorney General Rob Bonta said last week that his office was investigating OpenAI's proposed restructuring of its finances and governance. He and Delaware Attorney General Kathy Jennings also sent the company a letter expressing concerns about the safety of ChatGPT after meeting with OpenAI's legal team earlier last week in Delaware, where OpenAI is incorporated. "Together, we are particularly concerned with ensuring that the stated safety mission of OpenAI as a non-profit remains front and center," Bonta said in a statement last week. Microsoft invested its first $1 billion in OpenAI in 2019 and the two companies later formed an agreement that made Microsoft the exclusive provider of the computing power needed to build OpenAI's technology. In turn, Microsoft heavily used the technology behind ChatGPT to enhance its own AI products. The two companies announced on Jan. 21 that they were altering that agreement, enabling the smaller company to build its own computing capacity, "primarily for research and training of models." That coincided with OpenAI's announcements of a partnership with Oracle to build a massive new data center in Abilene, Texas. But other parts of its agreements with Microsoft remained up in the air as the two companies appeared to veer further apart. Their Thursday joint statement said they were still "actively working to finalize contractual terms in a definitive agreement." Both companies declined further comment. OpenAI had given its nonprofit board of directors -- whose members now include a former U.S. Treasury secretary -- the responsibility of deciding when its AI systems have reached the point at which they "outperform humans at most economically valuable work," a concept known as artificial general intelligence, or AGI. Such an achievement, per its earlier agreements, would cut off Microsoft from the rights to commercialize such a system, since the terms "only apply to pre-AGI technology." ___ The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives. ____ Associated Press coverage of philanthropy and non-profits receives support through the AP's collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP's philanthropy coverage, visit https://apnews.com/hub/philanthropy.

Microsoft and OpenAI announce the 'next phase' of their partnership

Microsoft and OpenAI have issued a joint statement to say that they have signed a non-binding memorandum of understanding for the "next phase" of their partnership. The companies are still finalizing the terms of agreement and haven't shared the details of what their future would look like exactly. But according to The New York Times, the deal includes hows the parties share technology and and the revenue from those technologies. The new agreement also reportedly modifies the clause in the original, which states that Microsoft cannot access OpenAI's most powerful technology if its board decides that it has reached human-like artificial general intelligence or AGI. In addition to the new deal, The Times says OpenAI is giving an equity stake worth at least $100 billion to its nonprofit arm that will continue to oversee and control the organization. As the publication notes, a change in the company's agreement paves the way for OpenAI to transition into a public benefit corporation, a type of corporation that's meant to make a positive impact on society, and for an eventual IPO. OpenAI had to reach an acceptable agreement with Microsoft first, including how much equity it's getting in the AI firm's for-profit arm. Microsoft had invested over $13 billion into OpenAI and is entitled to 49 percent of its future profits. Reports about OpenAI moving away from its complicated non-profit structure started coming out last year. After Christmas in 2024, it officially announced its plan to transform itself into a public benefit corporation with ordinary shares of stock. "It will enable us to raise the necessary capital with conventional terms like others in this space," it said at the time. In May, however, OpenAI announced that it was no longer going to remove the control of its for-profit arm from its non-profit board. "OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit," it said.

Preliminary Microsoft-OpenAI deal clears way for OpenAI's for-profit conversion

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? Microsoft and OpenAI have reached an agreement to extend their high-profile partnership, resolving months of strained negotiations and clearing the way for the artificial intelligence startup to move forward with its plan to form a for-profit corporation. The non-binding deal represents a potential turning point in one of the most closely watched relationships in the AI sector, though many of the terms have yet to be finalized. The new arrangement comes after a summer of contentious talks between the two companies, which have long been both collaborators and competitors in the race to develop advanced AI systems. Microsoft, an early investor in OpenAI, has committed more than $10 billion to the startup since 2019 and has integrated its models into products such as Office, GitHub, and its Copilot chatbot. At the same time, it has insisted on exclusive access to OpenAI's technology for its Azure cloud platform, giving it significant leverage in negotiations. OpenAI reportedly considered approaching antitrust regulators to loosen the contract's restrictions, a source told The Wall Street Journal. The preliminary deal removes a key obstacle to the company's restructuring effort, though the exact scope of Microsoft's ongoing control was not disclosed. Disputes over cloud access and intellectual property rights complicated the talks. According to a person familiar with the matter, OpenAI sought the ability to sell its products through other providers, while Microsoft pushed to maintain first rights to the startup's most advanced systems. At one point, the two sides even clashed over the definition of "artificial general intelligence," with Microsoft proposing a higher threshold - "artificial superintelligence" - as the benchmark for ending certain exclusivity rights. OpenAI is now in the final stages of setting up a for-profit company under a structure that preserves control by its existing nonprofit board. Under the proposed terms, the nonprofit will hold a stake valued at more than $100 billion if OpenAI reaches its targeted $500 billion valuation in private markets. That endowment could make the OpenAI nonprofit one of the largest philanthropic entities in the world, though questions remain about when and how those funds could be deployed. As part of the restructuring, Microsoft and the nonprofit board are expected to each hold stakes of roughly 30 percent, with employees and private investors owning the remainder, according to sources familiar with the deal. Investors have been told that the new corporate structure will be completed by the end of the year to avoid jeopardizing up to $19 billion in pledged funding. The plan faces regulatory scrutiny. Attorneys general in California and Delaware are reviewing whether OpenAI's conversion complies with charitable law. The proposal has also drawn criticism from a range of opponents, including Elon Musk (who is suing the company) as well as advocacy groups and rival tech firms such as Meta Platforms. The deal comes as Microsoft rebalances its reliance on OpenAI. While the company still plans to use OpenAI's models as its primary AI engine, it has also sought alternatives. Microsoft recently finalized a deal with Anthropic to integrate its AI systems within the 365 suite, in addition to incorporating those models into GitHub. Its cloud platform has also begun hosting systems developed by Musk's xAI. The diversification reflects Microsoft's concerns about OpenAI's stability. After Sam Altman, OpenAI's chief executive, was briefly dismissed in late 2023, Microsoft CEO Satya Nadella launched a competing in-house AI lab and scaled back the massive OpenAI-linked data center project code-named Stargate. Since then, OpenAI has shown increased reluctance to share its latest research with Microsoft, straining a partnership that was once considered mutually dependent.

Microsoft, OpenAI Reach Early Agreement in For-Profit Change

OpenAI and its largest investor, Microsoft Corp., have reached a preliminary agreement about the structure of their partnership, a move that could pave the way for the artificial intelligence startup's plan to restructure into a more traditional for-profit company. In a joint statement statement on Thursday, the companies said they had signed a "non-binding memorandum of understanding (MOU) for the next phase of our partnership." They also said they are "actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety."

Microsoft and OpenAI make a deal: Reading between the lines of their secretive new agreement

Microsoft and OpenAI signaled Thursday afternoon that they've agreed in principle on changing and continuing one of the defining partnerships of the AI era. Their three-sentence joint statement, announcing a non-binding memorandum of understanding, followed months of difficult negotiations. It gave away almost nothing on the surface -- reflecting the fact that the deal still needs to be finalized. But a major clue was embedded in OpenAI's companion statement about the equity stake that the OpenAI nonprofit entity will hold in a new public benefit corporation (PBC) that will be enabled by the deal, and in which Microsoft will apparently also play a major role. "As previously announced and as outlined in our non-binding MOU with Microsoft, the OpenAI nonprofit's ongoing control would now be paired with an equity stake in the PBC," the statement said. "Today, we are sharing that this new equity stake would exceed $100 billion -- making it one of the most well-resourced philanthropic organizations in the world." The disclosure of the valuation in conjunction with the MOU gives a sense for the massive scale of the computing and capital that Microsoft will be providing as part of the tentative deal. What is Microsoft getting in return? That's not yet clear. However, one of the thorniest issues in their talks has been OpenAI's ability to declare the arrival of artificial general intelligence (AGI) and unilaterally dissolve the partnership -- potentially cutting Microsoft off just as its multi-billion-dollar investment reached its a key moment. It would be hard to imagine that the new agreement doesn't resolve that issue. Under their partnership, Microsoft has provided massive computing power to OpenAI, fueling its work on ChatGPT and other breakthroughs. Microsoft has received, in return, exclusive rights to OpenAI's technology on its Azure cloud platform, along with a tight technology partnership that has helped Microsoft integrate OpenAI innovations into its products. It's also not yet clear what will happen to those provisions under the newly announced MOU. However, recent developments suggest the new era will bring more flexibility for both Microsoft and OpenAI to work with other industry partners. * The Information reported that Microsoft will now use technology from OpenAI's primary rival, Anthropic, to power some of the new AI features in its Office 365 software. * The Wall Street Journal reported that OpenAI has signed a contract to purchase $300 billion in computing from Oracle over roughly five years. * In January, Microsoft and OpenAI altered the terms of their cloud deal, replacing Microsoft's exclusivity on OpenAI cloud workloads with a right of first refusal to clear the way for OpenAI to partner with Oracle and others on the $500 billion Stargate AI project. In conjunction with the announcement Thursday, OpenAI also sought to preempt critics, rivals, and regulators who have questioned its plans to further expand its for-profit ambitions. "This recapitalization would also enable us to raise the capital required to accomplish our mission -- and ensure that as OpenAI's PBC grows, so will the nonprofit's resources, allowing us to bring it to historic levels of community impact," OpenAI said in its statement. OpenAI's nonprofit recently launched a $50 million grant program for community groups, an early signal of how it intends to use its newfound resources for public impact.

OpenAI for-profit restructuring given go-ahead by Microsoft in new non-binding deal

OpenAI may want to go public after it distances itself from Microsoft Microsoft and OpenAI have signed a non-binding agreement to restructure OpenAI into a for-profit company. Details of the agreement have not been confirmed, but OpenAI could ultimately want to go public after raising capital and adopting a more conventional corporate governance model following its huge success in recent years with generative AI. The news comes after huge investments from Microsoft into the ChatGPT maker, including $1 billion in 2019 and a further huge multibillion-dollar investment in 2023 that later turned out to be worth around $10 billion - around 18% of its total revenue for the second calendar quarter of 2023. "OpenAI and Microsoft have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership," OpenAI and Microsoft shared. "We are actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety." Under previous terms, Microsoft had exclusive rights to sell OpenAI's software via Azure and had preferential access to its technology, but this has since changed. Today, Microsoft is no longer OpenAI's sole compute provider. In July, we learned that Google Cloud would be joining forces with OpenAI for compute power. OpenAI is also seeking some degree of independence by reducing reliance on third parties, building out its own data center as part of the $500 billion Project Stargate. Reuters reporting citing a memo from OpenAI nonprofit board chairman Bret Taylor suggests the nonprofit arm could receive more than $100 billion in funding - about 20% of the $500 billion valuation OpenAI is reportedly seeking in private markets. However, with regulatory hurdles now standing between OpenAI's change of structure and its future, quite what the shakeup could mean for the ChatGPT maker remains unclear. Microsoft's share price increase peaked at 2.5% in after-hours trading following the announcement, marking investor confidence in its decision to free OpenAI from its reins.

OpenAI and Microsoft reach tentative deal to revise partnership

Why it matters: The deal with Microsoft resolves a major hurdle in OpenAI's planned corporate restructuring, but it still must be approved by regulators. What they're saying: "OpenAI and Microsoft have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership," the two companies said in a joint statement. "We are actively working to finalize contractual terms in a definitive agreement. * "Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety." * The companies declined to comment beyond the statement or reveal any of the revised terms. Zoom out: In a separate statement, OpenAI chairman Bret Taylor said that, as part of its planned restructuring, the OpenAI nonprofit would retain control over the for-profit private benefit corporation and would have a stake in that entity worth more than $100 billion. * Taylor said discussions with attorneys general in California and Delaware are ongoing." Zoom in: Opponents, including a variety of charitable institutions, have called on regulators to block the deal. * Elon Musk has also sued to stop the restructuring. This is a breaking news story. More details to come.

OpenAI's deal with Microsoft could pave the way for a potential IPO | Fortune

Both companies signed a non-binding memorandum outlining "the next phase" of their relationship, with a definitive agreement expected in the coming months. The announcement was light on details; financial small print was not disclosed, and the companies said they are still finalizing contractual terms. "Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety," the companies said in a Thursday statement. Nevertheless, the deal appears to address the structural and competitive friction that has complicated the relationship between OpenAI and its largest investor, paving the way for the $500 billion startup to convert its for-profit arm into a public benefit corporation (PBC). OpenAI's corporate structure is unusual. Originally founded as a nonprofit, it established a capped-profit arm in 2019, which allowed for large investments such as Microsoft's. The company has been trying to restructure its profit-focused entity into a more conventional corporate model to allow it to raise additional capital, while leaving the nonprofit parent in control of the startup's operations. A conversion to a more traditional structure, such as a Public Benefit Corporation, could allow the company to combine its public mission objectives with profit generation and possibly go public in the future. Altman is well aware that speculators want to see OpenAI float on the stock exchange. He told CNBC last month he had "very conflicted" feelings on a potential IPO, explaining: "Whenever we do go public, if we ever go public, I think there will be tremendous upside left in front of the company, but I get why people would love for us to be public or sooner. And I'm sure people also get the reality of like we're in still a crazy position and it would be very hard for us to be public given just all of the realities of that." Microsoft was an early investor in OpenAI and has cumulatively invested at least $13 billion in the AI startup since 2019. In exchange, the tech giant has received a share of the revenue from OpenAI's products, including ChatGPT, and has embedded the company's technology into Microsoft 365 products. However, the partnership has reportedly become strained as both companies scale their AI ambitions. Microsoft now counts OpenAI as a competitor and has been increasing its reliance on its own AI models. OpenAI has also inked a multibillion-dollar cloud deal with Oracle to ensure it has sufficient compute capacity, potentially alleviating its reliance on Microsoft's cloud support. The news of a deal was well-received by investors, with Microsoft's stock rising 2.4% in after-hours trading following the announcement. When asked for further details about the agreement, representatives for Microsoft and OpenAI referred Fortune to the companies' joint statement. However, the transition still needs to be cleared by state regulators. Both the California and Delaware attorneys general are already scrutinizing OpenAI's restructuring. Regulators are questioning whether OpenAI has strayed from its original public-benefit mission in favor of commercial growth -- recent suicides linked to ChatGPT have also complicated the issue. The investigations could culminate in lawsuits or significant settlement demands as conditions for moving forward. OpenAI co-founder Elon Musk has also been fighting the restructuring plans and has filed a lawsuit accusing the startup of defrauding investors. In a blog post also shared on Thursday, OpenAI board chairman Bret Taylor reaffirmed that OpenAI's nonprofit would continue to have control over the startup's operations and would obtain an equity stake in the new PBC worth more than $100 billion. He said this would make the nonprofit "one of the most well-resourced philanthropic organizations in the world." Taylor wrote in the post: "Our PBC charter and governance will establish that safety decisions must always be guided by this mission. We continue to work with the California and Delaware Attorneys General as an important part of strengthening our approach, and we remain committed to learning and acting with urgency to ensure our tools are helpful and safe for everyone, while advancing safety as an industry-wide priority." He also said that as part of this next phase, the company's nonprofit has begun considering applications for the first wave of a $50 million grant initiative that aims to support nonprofit and community organizations in the areas of AI literacy, community innovation, and economic opportunity.

OpenAI gets Microsoft OK for restructure, IPO plans

Microsoft and OpenAI said Thursday that they have signed a non-binding agreement that could allow the artificial intelligence startup to restructure and eventually go public, potentially resolving complications in one of the tech industry's most high-profile partnerships. The companies announced a memorandum of understanding for "the next phase of our partnership" and said they are working to finalize contractual terms in a definitive agreement. Financial details were not disclosed. "Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety," the companies said in a joint statement. The deal marks progress in OpenAI's efforts to convert from its current nonprofit structure to a conventional for-profit company, a change the ChatGPT maker says is necessary to raise capital and compete in the rapidly evolving AI market. OpenAI is currently valued at $500 billion in private markets. Microsoft has invested at least $13 billion in OpenAI since 2019 and shares revenue from ChatGPT and OpenAI's other tools. But the partnership has grown more complex as both companies have expanded their AI ambitions. Microsoft now lists OpenAI as a competitor and has been developing its own AI models, while OpenAI has signed major cloud computing deals with Oracle and Google to reduce its dependence on Microsoft's infrastructure. Under the restructuring plan, OpenAI's nonprofit parent company will continue to hold authority over the for-profit business while receiving an equity stake worth more than $100 billion, according to a memo from OpenAI board chairman Bret Taylor. The conversion faces regulatory hurdles. Attorneys general in California and Delaware have opened investigations into OpenAI's restructuring plans. Elon Musk and his AI company xAI have also sued OpenAI to stop the restructuring, claiming the company abandoned its original nonprofit purpose. For Microsoft, the agreement ensures continued access to OpenAI's technology even if the startup achieves what it calls artificial general intelligence, or AGI, which refers to humanlike AI capabilities that would have terminated their current partnership under existing terms. Under their previous contract, Microsoft would lose access to OpenAI's future models once AGI was achieved. The companies did not disclose how much of OpenAI Microsoft would own after the restructuring or whether Microsoft would retain exclusive access to OpenAI's latest models. OpenAI hopes to complete its conversion to a for-profit structure by the end of the year. The company risks losing billions in funding if it misses that timeline. The restructuring would also make it easier for the company to raise additional capital from public markets and institutional investors as it competes with rivals including Google's DeepMind, Anthropic, and others racing to develop more advanced AI systems.

OpenAI's restructuring gives non-profit parent $100bn stake

OpenAI CEO Sam Altman at the World Economic Forum 2024. Image: World Economic Forum/Benedikt von Loebell via Flickr (CC BY-NC-SA 2.0) Microsoft and OpenAI have signed a non-binding agreement outlining the next phase of their partnership. OpenAI is moving forward with its restructuring plans, announcing that it's non-profit arm will hold an equity stake exceeding $100bn in the resulting business. According to the Financial Times, this comes to around 20pc to 30pc of the restructured business. Estimates suggest that OpenAI's valuation is around $500bn. The AI behemoth, which was formed as a non-profit in 2015, announced plans to restructure into a public benefit corporation (PBC) last September. Although, it backed down from its plan earlier this year, announcing instead that the non-profit will retain control of the company. OpenAI is going ahead with the new plan, announcing that its non-profit will control the PBC and share in its profits. The non-profit's $100bn equity stake makes it "one of the most well-resourced philanthropic organisations in the world", the company said. Furthermore, Microsoft and OpenAI announced that they signed a non-binding memorandum of understanding. The two companies are "actively working to finalise contractual terms", they said in a joint statement. Microsoft has invested more than $13bn into OpenAI, and according to the Financial Times, Microsoft is expected to take around 30pc stake of the company. The publication further added that the contract is expected to determine Microsoft's access to OpenAI's revenue and intellectual property. The recapitalisation will allow the company to raise further capital, OpenAI added. Earlier this year, SoftBank invested $30bn in the company, with $10bn of the funds hinging on its ability to complete the for-profit transformation. The money-leaking company has also been on a spending spree to grow its capacity, with reports suggesting that it has signed a $300bn deal with Oracle for its cloud computing, a $10bn deal with Broadcom to make custom AI chips and a massive new data centre in India. CEO Sam Altman said that OpenAI will not generate profit until 2029 and expects to lose around $44bn until it does so. Elon Musk, one of OpenAI's co-founders and a direct competitor to the AI company, filed a suit last year alleging that OpenAI did not stick to its original objective of developing AI for the benefit of humanity. He later named Microsoft as a defendant in the case. In February, Musk made an unsolicited bid to purchase the non-profit that controls OpenAI for almost $100bn. Although days later, a lawyer for Musk said that he will withdraw the offer if OpenAI's board of directors agree to stop the planned conversion to a for-profit company. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news. OpenAI CEO Sam Altman at the World Economic Forum 2024. Image: World Economic Forum/Benedikt von Loebell via Flickr (CC BY-NC-SA 2.0)

OpenAI reaches new agreement with Microsoft to change its corporate structure

OpenAI has reached a new tentative agreement with Microsoft and said its nonprofit, which technically controls its business, will now be given a $100 billion equity stake in its for-profit corporation. The maker of ChatGPT said it had reached a new nonbinding agreement with Microsoft, its initial and still largest backer, "for the next phase of our partnership." The announcements on Thursday include a few details about these new arrangements. OpenAI's proposed changes to its corporate structure have drawn the scrutiny of regulators, competitors and advocates concerned about the impacts of artificial intelligence. OpenAI was founded as a nonprofit in 2015 and its nonprofit board has continued to control the for-profit subsidiary that now develops and sells its AI products. It's not clear whether the $100 billion equity stake the nonprofit will get as part of this announcement represents a controlling stake in the business. California Attorney General Rob Bonta said last week that his office was investigating OpenAI's proposed restructuring of its finances and governance. He and Delaware Attorney General Kathy Jennings also sent the company a letter expressing concerns about the safety of ChatGPT after meeting with OpenAI's legal team earlier last week in Delaware, where OpenAI is incorporated. "Together, we are particularly concerned with ensuring that the stated safety mission of OpenAI as a non-profit remains front and center," Bonta said in a statement last week. Microsoft invested its first $1 billion in OpenAI in 2019 and the two companies later formed an agreement that made Microsoft the exclusive provider of the computing power needed to build OpenAI's technology. In turn, Microsoft heavily used the technology behind ChatGPT to enhance its own AI products. The two companies announced on Jan. 21 that they were altering that agreement, enabling the smaller company to build its own computing capacity, "primarily for research and training of models." That coincided with OpenAI's announcements of a partnership with Oracle to build a massive new data center in Abilene, Texas. But other parts of its agreements with Microsoft remained up in the air as the two companies appeared to veer further apart. Their Thursday joint statement said they were still "actively working to finalize contractual terms in a definitive agreement." Both companies declined further comment. OpenAI had given its nonprofit board of directors -- whose members now include a former U.S. Treasury secretary -- the responsibility of deciding when its AI systems have reached the point at which they "outperform humans at most economically valuable work," a concept known as artificial general intelligence, or AGI. Such an achievement, per its earlier agreements, would cut off Microsoft from the rights to commercialize such a system, since the terms "only apply to pre-AGI technology." ___ The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives. ____ Associated Press coverage of philanthropy and non-profits receives support through the AP's collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP's philanthropy coverage, visit https://apnews.com/hub/philanthropy.

OpenAI, Microsoft reach restructuring agreement over for-profit arm

The company signaled it would need the green light from California and Delaware policymakers as part of the restructuring plan. Artificial intelligence company OpenAI has signed a non-binding memorandum of understanding with its largest investor, Microsoft, to restructure its business. In a Thursday notice, OpenAI said the move, first proposed in May, would allow its for-profit arm to transition to a public benefit corporation, while the nonprofit would maintain control of the company. Under the deal, the nonprofit arm will have a stake worth more than $100 billion in the public benefit corporation. "OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit," said CEO Sam Altman in May. "That will not change." The company said it would "continue to work with the California and Delaware Attorneys General" as part of the restructuring plan, signaling the need to work with local policymakers. OpenAI's physical headquarters is in San Francisco, but the company is legally incorporated in Delaware. Related: Alarm bells ring in US over OpenAI's crypto project World Founded in 2015 by tech figures including Elon Musk and Sam Altman, OpenAI launched as a nonprofit research lab focused on artificial intelligence. The company was responsible for the development of ChatGPT, one of the most significant large language models to arise in the last decade. OpenAI was the target of heavy criticism in 2023 when its board of directors pushed out Altman as CEO for allegedly being "not consistently candid in his communications." He was reinstated in a matter of days after pushback from staff and many in the public. The restructuring notice came about a month after OpenAI said it had raised $8.3 billion to reach a $300 billion valuation. The company is reportedly expected to generate $12.7 billion in total revenue in 2025.

OpenAI Reaches New Agreement With Microsoft to Change Its Corporate Structure

OpenAI has reached a new tentative agreement with Microsoft and said its nonprofit, which technically controls its business, will now be given a $100 billion equity stake in its for-profit corporation. The maker of ChatGPT said it had reached a new nonbinding agreement with Microsoft, its longtime partner, "for the next phase of our partnership." The announcements on Thursday include a few details about these new arrangements. OpenAI's proposed changes to its corporate structure have drawn the scrutiny of regulators, competitors and advocates concerned about the impacts of artificial intelligence. OpenAI was founded as a nonprofit in 2015 and its nonprofit board has continued to control the for-profit subsidiary that now develops and sells its AI products. It's not clear whether the $100 billion equity stake the nonprofit will get as part of this announcement represents a controlling stake in the business. California Attorney General Rob Bonta said last week that his office was investigating OpenAI's proposed restructuring of its finances and governance. He and Delaware Attorney General Kathy Jennings also sent the company a letter expressing concerns about the safety of ChatGPT after meeting with OpenAI's legal team earlier last week in Delaware, where OpenAI is incorporated. "Together, we are particularly concerned with ensuring that the stated safety mission of OpenAI as a non-profit remains front and center," Bonta said in a statement last week. Microsoft invested its first $1 billion in OpenAI in 2019 and the two companies later formed an agreement that made Microsoft the exclusive provider of the computing power needed to build OpenAI's technology. In turn, Microsoft heavily used the technology behind ChatGPT to enhance its own AI products. The two companies announced on Jan. 21 that they were altering that agreement, enabling the smaller company to build its own computing capacity, "primarily for research and training of models." That coincided with OpenAI's announcements of a partnership with Oracle to build a massive new data center in Abilene, Texas. But other parts of its agreements with Microsoft remained up in the air as the two companies appeared to veer further apart. Their Thursday joint statement said they were still "actively working to finalize contractual terms in a definitive agreement." Both companies declined further comment. OpenAI had given its nonprofit board of directors -- whose members now include a former U.S. Treasury secretary -- the responsibility of deciding when its AI systems have reached the point at which they "outperform humans at most economically valuable work," a concept known as artificial general intelligence, or AGI. Such an achievement, per its earlier agreements, would cut off Microsoft from the rights to commercialize such a system, since the terms "only apply to pre-AGI technology." OpenAI's corporate structure and nonprofit mission are also the subject of a lawsuit brought by Elon Musk, who helped found the nonprofit research lab and provided initial funding. Musk's suit seeks to stop OpenAI from taking control of the company away from its nonprofit and alleges it has betrayed its promise to develop AI for the benefit of humanity. ___ The Associated Press and OpenAI have a licensing and technology agreement that allows OpenAI access to part of AP's text archives. ____ Associated Press coverage of philanthropy and non-profits receives support through the AP's collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP's philanthropy coverage, visit https://apnews.com/hub/philanthropy.

Microsoft, OpenAI Reach a Non-Binding Deal to Allow OpenAI to Restructure

Microsoft and OpenAI said on Thursday they have signed a non-binding deal for new relationship terms that would allow OpenAI to proceed to restructure itself into a for-profit company, marking a new phase of the most high-profile partnerships to fund the ChatGPT frenzy. Details on the new commercial arrangements were not disclosed, but the companies said they were working to finalize terms of a definitive agreement. This marks a step forward in OpenAI's prolonged talks with Microsoft as the former seeks to raise capital under a more common governance structure and eventually go public to fund artificial intelligence development. Microsoft invested $1 billion in OpenAI in 2019 and another $10 billion at the beginning of 2023. Under their previous agreement, Microsoft had exclusive rights to sell OpenAI's software tools through its Azure cloud computing platform and had preferred access to the startup's technology. Microsoft was once designated as OpenAI's sole compute provider, though it lessened its grip this year to allow OpenAI to pursue its own data center project, Stargate, including signing $300 billion worth of long-term contracts with Oracle, as well as another cloud deal with Google. As OpenAI's revenue grows into the billions, it is seeking a more conventional corporate structure and partnerships with additional cloud providers to expand sales and secure the computing capacity needed to meet demand. Microsoft, meanwhile, wants continued access to OpenAI's technology even if OpenAI declares its models have reached humanlike intelligence - a milestone that would end the current partnership under existing terms. OpenAI said under current terms, its nonprofit arm will receive more than $100 billion -- about 20 percent of the $500 billion valuation it is seeking in private markets -- making it one of the most well-funded nonprofits, according to a memo from Bret Taylor, chairman of OpenAI's current nonprofit board. The companies did not disclose how much of OpenAI Microsoft will own, nor whether Microsoft will retain exclusive access to OpenAI's latest models and technology. Regulatory hurdles remain for OpenAI, as attorneys general in California and Delaware need to approve OpenAI's new structure. The company hopes to complete the conversion by year's end, or risk losing billions in funding tied to that timeline. Microsoft and OpenAI compete on products ranging from consumer chatbots to AI tools for businesses. Microsoft has also been working on developing its own AI models to reduce its dependence on OpenAI's technologies. Reporting by Zaheer Kachwala in Bengaluru, Krystal Hu and Stephen Nellis in San Francisco; Editing by Shilpi Majumdar, Chris Reese and Richard Chang. The final deadline for the 2025 Inc. Best in Business Awards is this Friday, September 12, at 11:59 p.m. PT. Apply now.

Is OpenAI About to Go Public? New Microsoft Deal Signals IPO Plans

OpenAI and Microsoft appear to have finally found common ground over a standoff that lasted almost the entirety of this year. The two companies, on Thursday, signed a non-binding memorandum of understanding (MoU) highlighting that it kickstarts the next phase of their partnership. While the details or the financial terms of the new deal are not known currently, a separate statement issued by the San Francisco-based artificial intelligence (AI) firm confirms that Microsoft is not stopping the conversion of its for-profit arm into a Public Benefit Corporation (PBC) or the non-profit part's access to its equity. New Microsoft Deal Lets OpenAI Non-Profit Gain Control Over PBC's Equity On Thursday, both companies made a joint statement and said, "OpenAI and Microsoft have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership. We are actively working to finalise contractual terms in a definitive agreement." While the short statement does not give away anything, it might have finally allowed OpenAI to go ahead with its PBC vision of generating revenue and removing the capped-profit mechanism, something the AI firm announced in May. So, what was the holdup, and how does this MoU solve it? According to The Verge's report in June, OpenAI and Microsoft were in a strained relationship ever since the former's announcement regarding the company's change of structure. The reason was simple. Ever since 2019, the Windows maker has invested $13 billion (roughly Rs. 1.1 lakh crore) into the company. In return, it receives first access to all OpenAI models and a percentage of profit from both ChatGPT and its enterprise services. Another term, which is now not in effect, made Microsoft the ChatGPT-maker's exclusive cloud partner. The report claims that after the PBC announcement, the tech giant backed down from the cloud exclusivity clause; however, it did not provide OpenAI the approval to convert its business into a PBC. Since Microsoft had a partnership contract, it had a contractual consent or investor right over any major changes to the structure of OpenAI's for-profit arm. Since the conversion into PBC removes the 100x capped-profit mechanism, it could significantly affect the tech giant's commercial terms. As a result, OpenAI required it, and Microsoft was reluctant to provide it. The Verge reported that due to this stalemate, OpenAI executives were also considering accusing the Satya Nadella-led corporation of anticompetitive behaviour, bringing regulators into the frame for potential violation of antitrust laws. However, it appears that both companies have found a way to amicably deal with the situation by signing a non-binding MoU, which should give OpenAI the right to formalise the conversion. This opens the path for the company to either seek more private investors, who will not be pushed away by the capped-profit mechanism, or push for an initial public offering (IPO) and let market forces determine its valuation. In a separate statement, the AI firm said, "As previously announced and as outlined in our non-binding MOU with Microsoft, the OpenAI nonprofit's ongoing control would now be paired with an equity stake in the PBC." OpenAI shared that the new equity stake will be more than $100 billion (roughly Rs. 8.8 lakh crore). The company emphasises that the growth of the PBC would mean an increase in the non-profit's resources, which would then be used for "AI literacy and public understanding, community innovation, and economic opportunity."

Microsoft, OpenAI reach deal that could bring big changes for both firms

OpenAI and its largest investor, Microsoft, have reached a preliminary agreement about the structure of their partnership, a move that could pave the way for the artificial intelligence startup's plan to restructure into a more traditional for-profit company. In a joint statement statement on Thursday, the companies said they had signed a "non-binding memorandum of understanding for the next phase of our partnership." They also said they are "actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety." Microsoft and OpenAI have been holding talks for months about reshaping their relationship, in part to secure Microsoft's assent for a restructuring of the startup away from its current nonprofit structure. In exchange for massive financial backing, Microsoft has the right to incorporate OpenAI's AI tools into its products.

Microsoft, OpenAI Sign Non-Binding Deal To Reshape Partnership As ChatGPT Maker Pushes $500 Billion Valuation - Microsoft (NASDAQ:MSFT)

On Thursday, Microsoft Corp. MSFT and OpenAI signed a non-binding agreement to reset the terms of their high-profile partnership, a move that could clear the way for ChatGPT-parent's restructuring into a for-profit entity as it pursues a $500 billion valuation. Microsoft-OpenAI Partnership Reset The companies said they are working toward a definitive deal that will redefine their relationship. Microsoft first invested $1 billion in OpenAI in 2019, followed by another $13 billion. Under the prior arrangement, Microsoft had exclusive rights to resell OpenAI tools on Azure and preferred access to its models. Those terms have been gradually loosened. OpenAI has already struck cloud contracts with Oracle Corp ORCL and Alphabet Inc.'s GOOG GOOGL Google while pursuing its own $300 billion data center project, codenamed Stargate. The new deal is expected to give OpenAI a more conventional corporate structure while ensuring Microsoft retains access to its advanced models. See Also: Jim Cramer Says Microsoft Paying Amazon's Anthropic For AI Is 'Big': Redmond Shifting Strategy? Governance And Funding Shift According to a memo from Bret Taylor, chair of OpenAI's nonprofit board, the nonprofit arm could receive more than $100 billion -- about 20% of OpenAI's projected $500 billion valuation, reported Reuters. That would make it one of the wealthiest nonprofits in the world. Regulatory approvals remain a hurdle. Attorneys general in California and Delaware must sign off on the conversion, which OpenAI aims to finalize by year's end to avoid losing billions in tied-up funding. Expansion Beyond Microsoft OpenAI is accelerating efforts to diversify its technology base. Earlier this month, reports revealed a $10 billion partnership with Broadcom Inc. AVGO to mass-produce proprietary AI chips starting in 2026, reducing reliance on Nvidia Corp. NVDA. At the same time, OpenAI is exploring a secondary stock sale that could raise its private market valuation to $500 billion, up from $300 billion earlier this year. That jump follows a record $40 billion funding round in April led by SoftBank Group Corp. SFTBY, with Microsoft also participating. Price Action: Microsoft shares inched up 0.13% on Thursday and have climbed 19.69% so far this year, according to Benzinga Pro. Benzinga's Edge Stock Rankings show that while MSFT faces minor short-term swings, it continues to post solid medium and long-term growth. More detailed performance insights are available here. Read Next: Alibaba Unites Its Empire To Fight Back Against Meituan Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock MSFTMicrosoft Corp$510.001.79%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum73.36Growth97.84Quality65.27Value11.95Price TrendShortMediumLongOverviewAVGOBroadcom Inc$359.21-0.12%GOOGAlphabet Inc$240.02-0.32%GOOGLAlphabet Inc$239.67-0.29%NVDANVIDIA Corp$177.220.03%ORCLOracle Corp$307.85-%SFTBYSoftBank Group Corp$60.75-%Market News and Data brought to you by Benzinga APIs

Microsoft and OpenAI 'Working to Finalize' Terms of Next Stage of Partnership | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. The companies said in a joint statement released Thursday (Sept. 11): "Microsoft and OpenAI have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership. We are actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety." In a separate statement released Thursday, OpenAI Chairman of the Board Bret Taylor said the company will move ahead with a planned evolution announced in May, in which the existing OpenAI nonprofit will not only control but also have an equity stake in a public benefit corporation (PBC). "Today, we are sharing that this new equity stake would exceed $100 billion -- making it one of the most well-resourced philanthropic organizations in the world," Taylor said. "This recapitalization would also enable us to raise the capital required to accomplish our mission -- and ensure that as OpenAI's PBC grows, so will the nonprofit's resources, allowing us to bring it to historic levels of community impact." The new structure reaffirms that OpenAI's core mission remains "ensuring AGI [artificial general intelligence] benefits all of humanity," Taylor said. OpenAI is currently working with the attorneys general of California and Delaware on the structure, Taylor said. When OpenAI announced its new corporate plan in May, PYMNTS reported that by leaving the nonprofit parent firmly in control of the for-profit arm behind ChatGPT, the plan walked back a December 2024 blueprint that would have ceded voting power in exchange for easier fundraising. Taylor said at the time that directors changed course after "hearing from civic leaders" and regulators. Microsoft has invested billions of dollars in OpenAI, with an agreement to continue sharing revenue until 2030. Days after OpenAI's announcement in May, it was reported that OpenAI was reworking its multi-billion-dollar agreement with Microsoft and that Microsoft was a crucial holdout to OpenAI's plans to restructure itself and move away from its nonprofit roots. In August, it was reported that OpenAI's corporate restructuring could be pushed back to next year, as the company's negotiations with Microsoft could complicate its plans.

Microsoft, OpenAI say non-binding deal reached over for-profit transition By Investing.com

Investing.com-- Microsoft Corporation (NASDAQ:MSFT) and OpenAI said on Thursday evening that they had reached a non-binding agreement over the artificial intelligence's plans to transition to a for-profit organization. No terms of the agreement were released by the companies, who in a joint statement said the agreement was for the "next phase" of their partnership. The two said they are "actively working to finalize contractual terms in a definitive agreement." Separately, OpenAI said the company's non-profit entity will hold an over $100 billion equity stake in its for-profit arm., which the startup is touting as a "public benefit corporation." OpenAI's non-profit arm will also hold overall decision-making authority in the firm, the company signaled. The company said its core goal remained to develop AI superintelligence. Thursday's agreement with Microsoft marks another step in OpenAI's quest to build out its for-profit ambitions and draw in more capital and business. The company was founded in 2015 as a non-profit, and in 2019 had created a for-profit arm- a limited liability company with capped profits. This allowed the startup to raise capital and grant equity to employees. But the company began facing increasing pressure to focus on profitability from investors, especially as the cost of running its flagship AI programs grew exponentially. This was especially after ChatGPT's breakthrough success in late-2022, which essentially kicked off the AI race. OpenAI's for-profit ambitions will allow the firm to raise capital through more conventional governance, while also opening the door to an eventual initial public offering. Microsoft had invested $1 billion in OpenAI in 2019 and another $10 billion in early-2023. The company was initially OpenAI's sole provider of computing power, although it loosened its grip earlier in 2025, with OpenAI seen planning its own data centers under project Stargate with Japan's SoftBank Group Corp. (TYO:9984). Softbank had earlier this year outlined plans to invest up to $40 billion in OpenAI, which could make the Japanese tech conglomerate the biggest stakeholder in the AI startup.

Microsoft agrees deal to allow OpenAI restructuring

STORY: Microsoft and OpenAI have agreed to rejig the terms of their relationship. The non-binding agreement announced Thursday (September 11) should allow the ChatGPT maker to proceed with turning itself into a for-profit company. Full details weren't disclosed, and the pair say they are still finalizing a definitive agreement. Microsoft invested $1 billion in OpenAI in 2019, and then another $10 billion in 2023. Under that agreement, it had exclusive rights to sell OpenAI's tools through its Azure cloud computing platform. It was also once the AI pioneer's exclusive provider of computing capacity. But OpenAI wants a more conventional corporate structure, and the freedom to partner with other cloud providers. Microsoft wants continued access to OpenAI's technology - even if the firm declares its AI to have reached humanlike intelligence. Under the existing agreement, hitting that milestone would have terminated the partnership. Regulatory hurdles could yet get in the way of the new deal. It will have to be cleared by attorneys general in California and Delaware. But OpenAI hopes to complete the conversion to for-profit status by the end of the year, or risk losing billions in funding that is tied to that timeline.