OpenAI and Microsoft Reach Preliminary Agreement on Partnership Restructuring

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.

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."

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.

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 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.

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 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.