OpenAI and Microsoft Renegotiate Partnership Amid Restructuring and IPO Plans

OpenAI expects to cut share of revenue it pays Microsoft by 2030 | TechCrunch

OpenAI sees itself paying a lower share of revenue to its investor and close partner Microsoft by 2030 than it currently does, The Information reported, citing financial documents. The news comes after OpenAI this week changed tack on a major restructuring plan to pursue a new plan that would see its for-profit arm becoming a public benefit corporation (PBC) but continue to be controlled by its nonprofit division. OpenAI currently has an agreement to share 20% of its top line with Microsoft, but the AI company has told investors it expects to share 10% of revenue with its business partners, including Microsoft, by the end of this decade, The Information reported. Microsoft has invested tens of billions in OpenAI, and the two companies currently have a contract until 2030 that includes revenue sharing from both sides. The deal also gives Microsoft rights to OpenAI IP within its AI products, as well as exclusivity on OpenAI's APIs on Azure. Microsoft has not yet approved OpenAI's proposed corporate structure, Bloomberg reported on Monday, as the bigger tech company reportedly wants to ensure the new structure protects its multi-billion-dollar investment. OpenAI and Microsoft did not immediately return requests for comment.

Microsoft and OpenAI may be renegotiating their partnership | TechCrunch

OpenAI is currently in "a tough negotiation" with its biggest investor and partner, Microsoft, according to the Financial Times. The AI startup recently announced a major change to its corporate restructuring plans -- while it still aims to convert its business arm into a for-profit public benefit corporation, its nonprofit board will still be in control. The FT says it spoke to multiple sources who describe Microsoft, which has invested $13 billion in OpenAI to date, as a key holdout needed to approve the restructuring. While the crux of the negotiation is how much equity Microsoft will receive in the new for-profit entity, the companies are also reportedly renegotiating their broader contract, with Microsoft offering to give up some of its equity in exchange for access to OpenAI technology developed after the current 2030 cutoff. Sources also told the FT that the relationship between the two companies has become more competitive as OpenAI's enterprise business has grown and as it pursues its wildly ambitious Stargate infrastructure project.

OpenAI, Microsoft in Talks to Reset High-Stakes Partnership: FT

OpenAI and Microsoft Corp. are revising the terms of their partnership that will enable the ChatGPT maker to go public at a future date while preserving the software giant's access to artificial intelligence technology, the Financial Times reported Sunday. Microsoft is offering to give up some of its equity stake in OpenAI's new for-profit business in exchange for accessing new AI models developed beyond 2030, when a key contract runs out, the newspaper cited people familiar with the negotiations as saying.

OpenAI negotiates with Microsoft to unlock new funding and future IPO

OpenAI and Microsoft are rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation designed to allow the ChatGPT maker to launch a future IPO, while protecting the software giant's access to cutting-edge artificial intelligence models. Microsoft, OpenAI's biggest backer, is a key holdout to the $260bn start-up's plans to undergo a corporate restructuring that moves the group further away from its roots as a non-profit with a mission to develop AI to "benefit humanity". A critical issue in the deliberations is how much equity in the restructured group Microsoft will receive in exchange for the more than $13bn it has invested in OpenAI to date. According to multiple people with knowledge of the negotiations, the pair are also revising the terms of a wider contract, first drafted when Microsoft first invested $1bn into OpenAI in 2019. The contract currently runs to 2030 and covers what access Microsoft has to OpenAI's intellectual property such as models and products, as well as a revenue share from product sales. Three people with direct knowledge of the talks said Microsoft is offering to give up some of its equity stake in OpenAI's new for-profit business in exchange for accessing new technology developed beyond the 2030 cut off. That deal is critical to OpenAI's restructuring efforts and could dictate the future of a company which has been in the vanguard of tech groups building large language models, a transformative technology that is beginning to disrupt global industries. OpenAI's chief executive Sam Altman has said his goal is to go further and build artificial general intelligence, systems that surpass the abilities of humans. Last week OpenAI ditched controversial plans that would have removed ultimate control of the group by its non-profit board. However, it retained plans for its business arm to become a public benefit corporation (PBC), a body focused on social good in addition to making profits. That corporate model, adopted by rivals such as Anthropic and Elon Musk's venture xAI, would still allow OpenAI to offer investors equity in the business. A person close to the company said the change is a key demand of investors and would ensure that an "IPO becomes possible" in the future. Negotiations between OpenAI and Microsoft are complicated by a cooling between the companies, according to multiple people with direct knowledge of their relationship. The groups remain close collaborators. Microsoft has embedded OpenAI's technology into its software products, while providing it with huge amounts of computing power to train AI models. But OpenAI's ambitions have increased competition with its biggest benefactor. The start-up has targeted enterprise customers with AI products, while seeking partners such as Japan's SoftBank and Larry Ellison's Oracle to build its own vast computing infrastructure dubbed "Stargate". "The friction comes partly due to style. OpenAI says to Microsoft 'gives us money and compute and stay out of the way: be happy to be on the ride with us.' So naturally this leads to tensions," said one senior employee at Microsoft. "To be honest, that is a bad partner attitude, it shows arrogance." One person close to OpenAI said: "Microsoft still wants [this conversion] to succeed. It's not like it's all gone to hell and it's open warfare. There's a tough negotiation but we're confident we'll get it done." OpenAI was founded as a non-profit research lab in 2015 by Altman, Musk and nine others. The group launched a for-profit subsidiary in 2019 into which outside groups could invest in exchange for a share of future profits, up to a certain cap. At the time, the group told investors including Microsoft to regard such funding "in the spirit of a donation" and warned them its mission would take precedence over profits. Recent investors have not regarded their backing as a donation, however. In October last year, OpenAI raised $6.6bn raise from SoftBank, Microsoft and venture capitalists including Thrive Capital and Altimeter Capital. In March, it raised a further $40bn in a round led by SoftBank. As part of those deals, provisions in the investors' contracts lay out how much equity they will receive when OpenAI converts to a new structure. Those contracts mean that the investors have the option to recoup some or all of the cash they have committed if OpenAI fails to convert into a PBC. OpenAI's executives are confident that their backers will remain committed even if there is a delay to the restructuring. The requirement to convert into a more conventional for-profit group is "a high level recognition of what's required to raise this amount of money," said one person close to OpenAI, who added that raising "$40bn under a capped profit structure is not achievable." Even if a deal can be reached with Microsoft, OpenAI faces further hurdles. It pledged on Monday to ensure its business arm would still ultimately be controlled by a non-profit board by giving the board a substantial equity stake in the PBC and the power to nominate its directors. But that has failed to satisfy critics who claim OpenAI is imperilling its mission by putting profit over purpose. Musk, who left OpenAI after falling out with Altman, has vowed to continue his legal action seeking to stop any corporate restructuring. "The charity is still turning over its assets and technology to private persons for private gain -- including Sam Altman -- while moving all of the charity's actual work on AI/AGI into a giant for-profit corporation," wrote Musk's attorney Marc Toberoff in a statement. Page Hedley, a former OpenAI employee, said that the proposed changes undermined OpenAI's mission and created "the potential for extraordinary wealth and power from artificial general intelligence [to] be reallocated from the public to OpenAI's investors." OpenAI must also persuade the authorities in California and Delaware -- the states in which it is headquartered and incorporated -- that its proposal will uphold the group's mission to benefit the public. Delaware's attorney-general Kathy Jennings said on Monday she would review OpenAI's new plan "for compliance with Delaware law by ensuring that it accords with OpenAI's charitable purpose and that the non-profit entity retains appropriate control over the for-profit entity." Industry insiders said a failure of OpenAI's new plan to make its business arm a PBC could prove a critical blow. That would hit OpenAI's ability to raise more cash, achieve a future float, and obtain the financial resources to take on Big Tech rivals such as Google. That has left OpenAI's future at the mercy of investors, such as Microsoft, who want to ensure they gain the benefit of its enormous growth, said Dorothy Lund, professor of law at Columbia Law School. "When you're a mission driven company which needs money from investors, you are in a dangerous position," she said. "You have to walk this line: you want your investors to keep giving you huge billion dollar cheques, so you need to keep them happy."

OpenAI negotiates with Microsoft to unlock new funding and future IPO, FT reports

May 11 (Reuters) - OpenAI and Microsoft (MSFT.O), opens new tab are rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation designed to allow the ChatGPT maker to launch a future IPO, while protecting the software giant's access to cutting-edge AI models, the Financial Times reported on Sunday. Reporting by Rhea Rose Abraham in Bengaluru; Editing by Emelia Sithole-Matarise Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

OpenAI and Microsoft reportedly renegotiating partnership to allow for potential IPO

The news: OpenAI and Microsoft are reworking the terms of their multibillion-dollar partnership, according to a report from the Financial Times. Background: OpenAI announced last week that it is moving forward with a restructuring plan to create a for-profit public benefit corporation, controlled by its nonprofit parent. OpenAI needs sign-off from Microsoft -- which has invested more than $13 billion in the ChatGPT maker since 2019 -- to proceed with the plan. What's new: The Financial Times reported that Microsoft could take a smaller equity stake in the new entity in exchange for extended access to OpenAI's technology beyond the previously agreed 2030 cutoff. Previously: Microsoft and OpenAI tweak the terms of their cloud deal, enabling $500B Stargate AI project

OpenAI and Microsoft in talks to revise terms and renew partnership, FT reports

Microsoft's side of the deal could be affected with a change in structure OpenAI and Microsoft are believed to be negotiating their partnership terms to enable OpenAI to potentially go public, while ensuring that Microsoft can continue accessing the AI startup's technology. Reuters explained that the two companies could be in the midst of rewriting their terms, however Redmond's extensive involvement in the ChatGPT-maker's recent history could be adding further complexities to any potential IPO. Details of the alleged deal could have considerable consequences for Microsoft, which currently has an agreement allowing it to access OpenAI's models until the end of the decade. Being a private company, we have no real indication of how much OpenAI might be worth and how much it may wish to list for, however Microsoft's estimated $13.75 billion stake in the company is certainly a considerable sum. It's been reported that OpenAI is reconsidering its transformation from a nonprofit to a fully commercial enterprise after pushback from employees, academics and competitors, including Elon Musk. "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," OpenAI CEO Sam Altman said in a letter to staff. "We currently cannot supply nearly as much AI as the world wants and we have to put usage limits on our systems and run them slowly," Altman explained. The letter details how the for-profit LLC will transition to a Public Benefit Corporation (PBC), much like Anthropic and X.ai have done, however the nonprofit division will remain in control of the PBC, maintaining its position as a "big shareholder." TechRadar Pro has asked Microsoft and OpenAI about the implications of a potential deal, but neither company replied to our email.

OpenAI and Microsoft engage in tense negotiations over the future of their partnership - SiliconANGLE

OpenAI and Microsoft engage in tense negotiations over the future of their partnership Once the best of friends, OpenAI and its most important financial backer Microsoft Corp. are now involved in tough negotiations over the future of their partnership. The talks aim to redefine the nature of their strategic alliance as the ChatGPT maker seeks a path towards a future Initial Public Offering. The high-stakes discussions, first reported by The Financial Times, come at a time when OpenAI is looking to restructure itself as a public benefit corporation in order to attract billions of dollars in additional funding required to fuel the development of more powerful artificial intelligence. The talks with Microsoft, which has already invested more than $13 billion in OpenAI, are fundamental to the AI startup's future. OpenAI, which is run by a non-profit entity, is seeking to balance its original mission to "benefit humanity" with the commercial demands of its investors, which have put up the immense capital that has enabled it to lead the AI revolution. Meanwhile, Microsoft is looking to ensure it can access OpenAI's future technology beyond a deadline of 2030, as stipulated in its current contractual agreement. Earlier this month, OpenAI said it's scrapping plans for a restructuring that would have separated its non-profit and for-profit arms, meaning that the founding non-profit entity will retain overall control. The commercial arm of the business will still be converted into a PBC. The shift aims to satisfy OpenAI's investors and their commercial demands, but it still requires the approval of Microsoft, its biggest financial backer. One of the most critical issues pertains to the amount of equity Microsoft will receive in the new PBC, while the terms of their original agreement established in 2019 are also subject to renegotiation. One source told the Financial Times that Microsoft is considering giving up some of its equity stake in the for-profit entity in exchange for guaranteed access to any new technologies it develops after the 2030 cut-off date. The talks come at a time when OpenAI's and Microsoft's relations have come under scrutiny due to the companies' diverse interests. OpenAI has become way more ambitious in recent years, and is targeting enterprise customers with its AI products, while working with rivals of Microsoft, such as Oracle Corp. and SoftBank Group Corp. on "Stargate", a massive multi-billion dollar AI infrastructure building project. One senior Microsoft executive reportedly slammed OpenAI for its bad attitude, complaining that the startup just wants it to "give us money and compute and stay out of the way". "To be honest, that is a bad partner attitude, it shows arrogance," the unnamed executive said. But he insisted that Microsoft still wants the partnership to succeed, adding that it's a "tough negotiation" but both companies are confident they'll get the details ironed out. OpenAI has evolved dramatically from the original non-profit research lab it set out to be. When it launched its for-profit subsidiary in 2019, it told investors to view any funds they provide in the "spirit of a donation", citing its non-profit mission. Investors initially agreed to that, but that is not the case with further investments such as the $6.6 billion it raised in October 2024 or the $40 billion raise led by SoftBank in March. Now, OpenAI's backers demand a substantial return on their investment. OpenAI's decision to become a PBC, which is the same model as the rival AI company Anthropic PBC, is said to be a "high-level recognition" of what's needed to continue raising billions of dollars in investment. But the shift from a pure non-profit has attracted lots of opposition. One of the biggest critics is Elon Musk, who helped co-found OpenAI along with nine others, and has mounted a legal challenge to try and prevent the startup's corporate restructuring. "The charity is still turning over its assets and technology to private persons for private gain -- including Sam Altman -- while moving all of the charity's actual work on AI/AGI into a giant for-profit corporation," Musk's attorney Marc Toberoff told Bloomberg after OpenAI revised its plans last week. "It changes nothing". OpenAI's plans are also being scrutinized by regulators. Delaware Attorney General Kathy Jennings said last week her office intends to review the startup's latest plan to ensure it complies with state law and accords with OpenAI's "charitable purpose". Columbia Law School professor Dorothy Lund said OpenAI has been forced to walk a very tight line. "When you're a mission-driven company which needs money from investors, you are in a dangerous position," she said. "You want your investors to keep giving you huge billion dollar checks, so you need to keep them happy."

OpenAI's new plan means less cash for Microsoft

OpenAI expects to reduce the share of its revenue paid to Microsoft by 2030, according to a report by The Information, citing the company's financial documents. This development comes as OpenAI has unveiled a major restructuring plan, transforming its for-profit arm into a public benefit corporation (PBC) while remaining under the control of its nonprofit division. Currently, OpenAI is contracted to share 20% of its revenue with Microsoft, but it anticipates this figure will drop to 10% by the end of the decade, not just for Microsoft, but for its business partners overall, The Information reported. Microsoft has invested tens of billions of dollars in OpenAI, and their agreement, set to expire in 2030, includes mutual revenue sharing. Additionally, the deal grants Microsoft access to OpenAI's intellectual property within its AI products and exclusive rights to OpenAI's APIs on Azure. Microsoft's approval of OpenAI's proposed corporate restructuring is pending, Bloomberg reported, as the tech giant seeks assurances that its substantial investment is protected under the new structure. OpenAI and Microsoft have not responded to requests for comment.

Microsoft and OpenAI renegotiate investment deal: Report

News of the deal follows restructuring plans from OpenAI to focus on a public benefit corporation controlled by a non-profit organization. Tech company Microsoft and artificial intelligence firm OpenAI are reportedly in talks to renegotiate the investment deal between the AI firm and Microsoft, which is OpenAI's biggest financial backer. According to a report from the Financial Times, Microsoft may give up a portion of its equity in OpenAI for continued access to the AI company's products and models beyond 2030, when some of the original terms of a deal signed between the two companies expire. Microsoft has invested over $13 billion into OpenAI since 2019, when it first acquired an interest in the artificial intelligence firm. OpenAI is attempting to restructure the company to shift its focus to profit-making. However, those plans have met with pushback from co-founders like Elon Musk and early investors. The deal between OpenAI and Microsoft is critical to OpenAI's restructuring and the future of the US-based AI startup company. Advancing artificial intelligence has also become a key policy objective for global leaders as the AI arms race heats up. Related: OpenAI to stay nonprofit, scrap proposed overhaul OpenAI was founded as a non-profit entity in 2015 by businessman Elon Musk, tech entrepreneur Sam Altman, and AI researcher Ilya Sutskever. However, in 2024, the company began mulling a corporate restructuring that would convert the company from a non-profit entity to a for-profit corporation. Elon Musk has been one of the biggest critics of the plan, calling into question the legality of the proposed shift in a November 2024 legal filing. The tech billionaire also blasted the company's focus on closed-source software development, which he said was not the original objective of OpenAI. "OpenAI was actually started and was meant to be open source. I named it 'OpenAI' after open source, now it is, in fact, closed source. It should be renamed super closed source AI for maximum profit AI," Musk told an audience at the New York Times DealBook Summit. In February 2025, a group of investors led by Musk submitted a $97.4 billion bid to take over OpenAI. However, the deal was flatly rejected by OpenAI CEO Sam Altman. More recently, on May 5, OpenAI announced it was abandoning its shift to a purely for-profit model and is choosing to shift to a public benefit corporation -- a profit-driven structure with legal obligations to fulfill social or public goods objectives -- controlled by a non-profit entity.

OpenAI Negotiates with Microsoft for New Funding, Future IPO: Report

Last contract between Microsoft and OpenAI was drafted six years ago OpenAI and Microsoft are rewriting terms of their multibillion-dollar partnership in a negotiation designed to allow the ChatGPT maker to launch a future IPO, while protecting the software giant's access to cutting-edge AI models, the Financial Times reported on Sunday. A critical issue is how much equity in OpenAI's new for-profit business Microsoft will receive in exchange for the more than $13 billion (roughly Rs. 1,10,089 crore) it has invested in the company to date, the report said. It said Microsoft is offering to give up some of its equity stake in exchange for access to new technology developed beyond the 2030 cutoff. They are also revising terms of a wider contract, first drafted when Microsoft initially invested $1 billion (roughly Rs. 8,468 crore) into OpenAI in 2019, the report said. Microsoft declined to comment on the report. OpenAI did not immediately respond to Reuters' requests for comment. OpenAI has told investors it will share a smaller fraction of revenue with its largest backer as it moves ahead with restructuring, The Information reported last week. In January, Microsoft changed some terms of a deal with OpenAI after entering a joint venture with Oracle and Japan's SoftBank Group to build up to $500 billion (roughly Rs. 42,31,440 crore) of new AI data centers in the US. © 2025 Bloomberg LP

OpenAI Plans to Cut Microsoft Revenue Share After Restructuring: Report

In January, Microsoft changed some key terms of a deal with OpenAI OpenAI has told investors it will share a smaller fraction of revenue with major backer Microsoft as it moves ahead with its restructuring, The Information reported on Tuesday. The ChatGPT-maker has dialed back a significant restructuring plan, with its nonprofit parent retaining control in a move that is likely to limit CEO Sam Altman's power over the firm. In financial projections shared with investors, OpenAI said the percentage of revenue shared with Microsoft would drop by at least half by the end of this decade, the report said. In an existing deal, OpenAI has agreed to share 20 percent of its revenue with Microsoft through 2030, the Information reported. OpenAI told some potential and current investors that it would only share 10 percent of revenues with commercial partners including Microsoft by 2030, the report said, citing private documents, adding that Microsoft wants access to OpenAI's technology beyond 2030. In January, Microsoft changed some key terms of a deal with OpenAI after its joint venture with Oracle and Japan's SoftBank Group to build up to $500 billion (roughly Rs. 42,31,976 crore) of new artificial intelligence data centers in the United States. Microsoft has said it has "revenue sharing agreements that flow both ways" with OpenAI, with the key elements of the partnership remaining in place for the duration of the contract through 2030. "We continue to work closely with Microsoft, and look forward to finalising the details of this recapitalisation in the near future," an OpenAI spokesperson told The Information. Microsoft declined to comment on the report, while OpenAI did not immediately respond to a Reuters request for comment outside regular business hours. © Thomson Reuters 2025

OpenAI in talks with Microsoft for new funding, future IPO: FT report

OpenAI, backed by Microsoft's $13 billion investment, is reportedly renegotiating its deal with the software giant. The aim is to restructure into a for-profit entity and potentially pursue an IPO in the future. Microsoft may relinquish some equity in exchange for continued access to OpenAI's cutting-edge AI technology beyond the current contract's 2030 expiration.Sam Altman's OpenAI is renegotiating a multibillion-dollar deal with Microsoft to allow the ChatGPT maker an IPO in the future, while protecting the software giant's access to cutting-edge artificial intelligence (AI) models, Financial Times reported. Microsoft is OpenAI's largest backer with an investment of over $13 billion, and a key holdout in the latter's efforts to restructure into a for-profit company from a non-profit. A critical issue in the negotiations is how much equity Microsoft will hold in the restructured OpenAI. The original contract was signed in 2019 and ends in 2030, with intellectual property (IP) access, product rights, and revenue share under its purview. The two companies are revising the terms of this broader contract, FT reported citing people with knowledge of the matter. Microsoft may surrender some equity in exchange for continued access to OpenAI's tech beyond 2030, the report said.

OpenAI To Slash Microsoft Revenue Share By 2030: Report - Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL)

OpenAI reportedly plans to cut the share of revenue it pays to Microsoft Corporation MSFT by at least half by the end of the decade. What Happened: OpenAI has informed investors that it will reduce the percentage of revenue it shares with Microsoft, its largest backer, reported Reuters on Tuesday (via The Information). Currently, OpenAI has an agreement to share 20% of its revenue with Microsoft through 2030. However, internal financial projections shared with investors suggest that figure will drop to just 10% by the end of the decade, the report said, citing private documents. See Also: Elon Musk Says Will Come As A 'Surprise To Most' As China's Economy Surpasses US And EU Amid Rising Tariffs And Growing Recession Fears An OpenAI spokesperson told The Information, "We continue to work closely with Microsoft, and look forward to finalizing the details of this recapitalization in the near future." OpenAI and Microsoft did not immediately respond to Benzinga's request for comments. Why It's Important: The latest development comes a day after OpenAI's nonprofit parent decided to retain control over the company. In January, Microsoft revised certain terms of its agreement with OpenAI following the announcement of a separate joint venture involving Oracle Corp ORCL and Japan's SoftBank Group SFTBF SFTBY to invest up to $500 billion in new AI data centers across the U.S. Microsoft has stated that its agreement with OpenAI includes reciprocal revenue-sharing provisions and that the core components of their partnership are set to remain active through the end of the contract in 2030, the report said. Microsoft received a robust growth score of 64.83% from Benzinga Edge Stock Rankings. Click here to compare its performance with other major tech firms such as Oracle and SoftBank. Read Next: JPMorgan CEO Jamie Dimon Warns Recession Is Best-Case Outcome Of Trump Trade War Photo Courtesy: Hamara On Shutterstock.com Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. MSFTMicrosoft Corp$436.00-0.04%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum72.58Growth64.83Quality37.11Value14.26Price TrendShortMediumLongOverviewORCLOracle Corp$149.450.11%SFTBFSoftBank Group Corp$52.45-0.47%SFTBYSoftBank Group Corp$26.08-0.84%Market News and Data brought to you by Benzinga APIs

OpenAI's IPO Ambitions Hang In The Balance As Microsoft Negotiates Equity: Report - Microsoft (NASDAQ:MSFT)

OpenAI is reportedly in high-stakes negotiations with Microsoft Corporation MSFT to revise the terms of their multibillion-dollar partnership. What Happened: A key sticking point of the negotiation is how much equity Microsoft will receive in the restructured OpenAI entity in exchange for its more than $13 billion investment to date, reported the Financial Times, citing multiple sources. Talks also involve revising an existing contract, signed when Microsoft first invested $1 billion in 2019, that governs access to OpenAI's intellectual property and outlines a revenue-sharing arrangement. See Also: Netflix Debuts OpenAI-Backed Search Engine That Lets You Discover Movies And TV Shows Based On Emotions, Not Just Titles As per the report, Microsoft may be willing to relinquish some of its equity in exchange for extended access to OpenAI's future technologies beyond 2030, when the current agreement expires. Why It's Important: Last week, it was reported that OpenAI plans to cut the revenue share it pays to Microsoft by at least half by 2030. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. OpenAI has also named Instacart CEO Fidji Simo to the newly established position of CEO of Applications, where she will report directly to Sam Altman, as the AI giant reshapes its leadership in anticipation of future advancements in artificial intelligence. Price Action: Per Benzinga Pro, Microsoft shares have risen 1.35% over the past five days. According to Benzinga Edge Stock Rankings, MSFT holds a strong growth score of 65.30%, highlighting its solid market momentum. Click here to see how it stacks up against other top-performing stocks. Photo Courtesy: Ascannio On Shutterstock.com Read Next: Nvidia Not Acting In US Interests, Says Chamath Palihapitiya -- Questions, How Alibaba Or DeepSeek Are One Step Ahead Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. MSFTMicrosoft Corp$438.280.03%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum72.84Growth65.30Quality36.55Value14.21Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

OpenAI and Microsoft Reportedly Rework Pact Ahead of Possible IPO | PYMNTS.com

The negotiated deal would allow the artificial intelligence (AI) company to someday launch an initial public offering (IPO), while protecting Microsoft's access to AI models, the Financial Times (FT) reported Sunday (May 11). As that report noted, Microsoft is a crucial holdout to OpenAI's plans to restructure itself and move away from its nonprofit roots. OpenAI recently abandoned a plan that would have taken away control of the company from its nonprofit board, while still sticking to plans for its business arm to become a public benefit corporation (PBC). This, the FT said, would allow it to turn a profit while still focusing on the original goal of AI to benefit humanity. One of the key issues in these discussions is how much equity in a restructured OpenAI Microsoft will get in exchange for the $13 billion-plus it has invested in the startup, the report said. Multiple sources with knowledge of the negotiations told the FT the companies are also revising the terms of a larger contract, formed when Microsoft first invested $1 billion into OpenAI in 2019. In its current iteration, that contract runs to 2030 and covers what access Microsoft has to OpenAI's intellectual property and revenue sharing from product sales. Sources said Microsoft would be willing to give up some of its equity stake in OpenAI's new for-profit business in exchange for access to technology developed after 2030. The sources also say the negotiations are being complicated by a cooling relationship between the two companies. PYMNTS spoke last week with legal experts on OpenAI's planned PBC shift. Marcus Wolter, partner and global director of corporate practice at the law firm Caldwell, said the PBC structure is an improvement. "For OpenAI, it is still a better situation," Wolter said. "They will be able to raise capital more easily and, as a public benefit company, they are merely required to balance the impact of the actions taken with the interests of all stakeholders and not just shareholders."

Microsoft Moves to Protect Its Turf as OpenAI Turns Into Rival | PYMNTS.com

OpenAI's attempt to balance its for-profit bent with its nonprofit mission When Microsoft first invested in OpenAI in 2019, it likely didn't expect that the fledgling artificial intelligence (AI) research lab would become the juggernaut that it is today. That all changed when ChatGPT became a household word in 2022. But that also means the agreement it first struck with the startup, which was a nonprofit back then, would one day inevitably change. That is what's going on today. The FT is reporting that Microsoft and OpenAI are renegotiating their partnership deal to one in which the software giant would protect its equity stake while ensuring access to future technologies. OpenAI gets more flexibility, with a possible IPO in its future. "The altering of Microsoft and OpenAI's partnership to allow for an initial public offering is a big step for the AI pioneer," Samuel Kerr, global head of equity capital markets at data provider MergerMarket, told PYMNTS. "In this new wave of artificial intelligence investing, there are few more prized IPO candidates than OpenAI." While there's more work for OpenAI to do before an IPO, the AI startup would be a "pure play way to invest in LLM [large language models] innovation on the public markets," Kerr said, adding that among the private AI leaders, OpenAI "remains one of the most attractive due to ChatGPT." "A public listing for OpenAI, and perhaps even listings by its competitors like xAI or Anthropic, would allow retail investors to back new digital champions, give access to new pools of investment capital for future growth and allow for monetization opportunities for early backers," Kerr said. Microsoft's first investment in OpenAI was for $1 billion. In return, Microsoft became OpenAI's sole cloud provider and would have access to its technologies short of full artificial general intelligence (AGI). This same year, OpenAI created a for-profit subsidiary whose profits are capped. Microsoft's investment would become prescient after ChatGPT became the leading AI chatbot in the world. The company would further invest in OpenAI for a reported total of about $13 billion. It also held an equity stake in OpenAI and would share in any profits from the startup. But the escalating cost of AI model training and infrastructure made OpenAI reconsider its capped-profit structure, since venture capitalists balked at giving billions of dollars if their profits would be limited. Read more: OpenAI's New Corporate Structure Sets Up a Tangled Legal Future, Experts Say OpenAI wanted to convert itself into a for-profit public benefit corporation (PBC), which doesn't have a capped profit unit but has a public good mandate; the nonprofit would be an arm of the PBC. Elon Musk, who co-founded OpenAI, sued to stop it from becoming a for-profit company. Later, after consulting with the attorneys general of California and Delaware as well as civic leaders, OpenAI said it would keep its nonprofit parent and convert the capped profit entity to a PBC. Musk vowed to continue suing, his attorney has told PYMNTS. While the corporate structure fight has been going on, OpenAI has become a competitor of Microsoft, rolling out its own consumer applications, developer tools and infrastructure. It's no longer just a research lab anymore. The hiring of Instacart CEO Fidji Sumo further cemented OpenAI's commercial focus. Here are some ways in which Microsoft and OpenAI compete: Roman Eloshvili, CEO of ComplyControl, an AI-powered risk management company, told PYMNTS that it's not unusual for tech companies to "struggle when trying to balance profit with purpose, but OpenAI's case may well demonstrate that it's possible. That you can go big, raise serious funds, and still position yourself as mission-driven." If OpenAI succeeds in balancing both, "the ripple effects across the tech industry are going to be significant, helping set new standards for other companies and startups," Eloshvili said. For Microsoft, the restructured deal is a trade-off. Giving up equity in exchange for long-term access to OpenAI's tech secures its future access to cutting-edge AI solutions for many years ahead. "It ensures that the company has a seat at the table in the rapidly developing AI landscape without needing to outright control OpenAI," Eloshvili said. "Strategically speaking, it's a smart move." For now, Microsoft is a key holdout to OpenAI's restructuring plan, according to FT. A critical issue in the negotiations is how much equity Microsoft will receive in the restructured company. The original contract runs until 2030. Microsoft is willing to give up some equity in exchange for access to any new OpenAI tech beyond 2030.

Report: OpenAI Aims to Reduce Revenue Sharing With Microsoft | PYMNTS.com

The artificial intelligence startup has an agreement with Microsoft to share 20% of its top-line revenue. However, OpenAI told investors it expects to share just 10% of its revenue with its partners, Microsoft among them, by 2030, The Information reported Tuesday (May 6), citing financial documents. The company continues "to work closely with Microsoft and [looks] forward to finalizing the details of this recapitalization in the near future," an OpenAI spokesperson said, per the report. Microsoft has invested billions of dollars in OpenAI, with an agreement to continue sharing revenue until 2030, the report said. Meanwhile, Microsoft's strategy of installing AI as a default feature on its software seemed to be bearing fruit. The company recorded a 10% uptick in revenue from consumer subscriptions to Office 365 in the three months ending in March versus a year prior. News about OpenAI's revenue plans came one day after the company announced it would revise its corporate plan to keep its nonprofit parent firmly in control of the for-profit entity behind ChatGPT. That decision reverses the company's earlier plan that would have given up voting power in exchange for easier fundraising. "When we started OpenAI, we did not have a detailed sense for how we were going to accomplish our mission," CEO Sam Altman wrote in a Monday (May 5) company blog post. "We started out staring at each other around a kitchen table, wondering what research we should do. Back then, we did not contemplate products, a business model. We could not contemplate the direct benefits of AI being used for medical advice, learning, productivity and much more, or the needs for hundreds of billions of dollars of compute to train models and serve users." OpenAI is in the middle of planning a $40 billion funding round led by SoftBank, which could value the company at roughly $300 billion. The round had been contingent on the company switching to for-profit control. Keeping the nonprofit arm could complicate the fundraising effort, but it could also help to defuse a lawsuit from OpenAI co-founder Elon Musk, who accuses the company of straying from its public-interest roots.

OpenAI Reduces Microsoft Revenue Share as Both Companies Expand AI Ecosystems

Microsoft is reportedly working to reduce its reliance on OpenAI by developing its own advanced AI models. | Credit: Anadolu / Getty Images. OpenAI plans to reduce the share of revenue it provides to Microsoft from 20% to 10% by 2030, as part of a broader restructuring strategy. The decision follows OpenAI's reversal of its intention to become a for-profit company. Instead, it will remain under the control of its nonprofit board while transitioning its for-profit subsidiary into a public-benefit corporation. As both companies continue to innovate in artificial intelligence, the shift in revenue sharing reflects their strategic focus on building expansive AI ecosystems. OpenAI To Cut Microsoft's Revenue Share On Tuesday, May 6, it was reported that OpenAI informed investors it would significantly reduce the portion of revenue shared with Microsoft, its primary financial backer. According to The Information , the revenue share, currently set at 20% until 2030, will be cut in half or more by the end of the decade. Investors were told that after 2030, OpenAI would allocate only 10% of its revenues to Microsoft and other commercial partners. However, Microsoft is reportedly seeking continued access to OpenAI's technology beyond 2030. Strategic Shifts The revised revenue-sharing model comes as OpenAI continues to attract significant investments from global tech leaders. In January, the company signed a deal with Japan's SoftBank Group and Oracle to invest $500 billion in building new AI data centers across the U.S. The Japanese company also led a $40 billion funding round for the company, at a valuation of $300 billion. Meanwhile, Microsoft is reportedly working to reduce its reliance on OpenAI by developing its own advanced AI models. In March, reports indicated that Microsoft's AI division was training reasoning models that could directly compete with OpenAI's offerings. The company is also testing models from other AI firms. Despite these developments, both companies have stated their continued commitment to the partnership. "We continue to work closely with Microsoft, and look forward to finalizing the details of this recapitalization in the near future," an OpenAI spokesperson told The Information. OpenAI's Expensive AGI Pursuit OpenAI, led by CEO Sam Altman, is undertaking a costly mission to achieve artificial general intelligence (AGI). In a letter to employees published on Monday, Altman reaffirmed OpenAI's dedication to building AGI. "We now see a path for AGI to become the most capable tool in human history, empowering individuals directly," Altman wrote. "If we succeed, we believe people will build extraordinary things for one another and drive lasting improvements in society and quality of life." Altman added that the company aims to "build a brain for the world and make it super easy for people to use for whatever they want." However, the pursuit of AGI comes with staggering financial demands. According to The Information , OpenAI is spending most of its revenue on computing power needed to operate and develop its AI models. The company expects these costs to exceed $320 billion between 2025 and 2030, the report stated.

OpenAI negotiating with Microsoft for new funding, future IPO: FT

OpenAI and Microsoft are rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation designed to allow the ChatGPT maker to launch a future IPO, while protecting the software giant's access to cutting-edge AI models, the Financial Times reported on Sunday. A critical issue is how much equity in OpenAI's new for-profit business Microsoft will receive in exchange for the more than $13 billion it has invested in the company to date, the report said. It said Microsoft is offering to give up some of its equity stake in exchange for access to new technology developed beyond the 2030 cutoff. They are also revising the terms of a wider contract, first drafted when Microsoft initially invested $1 billion into OpenAI in 2019, the report said. OpenAI and Microsoft did not immediately respond to Reuters' requests for comment. OpenAI has told investors it will share a smaller fraction of revenue with its largest backer as it moves ahead with restructuring, The Information reported last week. In January, Microsoft changed some terms of a deal with OpenAI after entering a joint venture with Oracle and Japan's SoftBank Group to build up to $500 billion of new artificial intelligence data centers in the U.S.

OpenAI plans to slash revenue share to Microsoft- The Information By Investing.com

Investing.com-- OpenAI plans to severely reduce the amount of revenue shared with Microsoft (NASDAQ:MSFT), The Information reported on Tuesday, as the artificial intelligence startup undergoes a major restructuring. OpenAI plans to reduce its revenue shared with Microsoft by at least 50% by the end of the decade, the report said. This comes as OpenAI undergoes a sweeping restructuring, which major investor Microsoft still needs to sign off on. The company had earlier this week signaled that it will no longer seek to convert into a for-profit enterprise, although it will still restructure to allow for more capital raising. The Information report also comes amid increased speculation that Microsoft is quietly tapering off its partnership with OpenAI, especially as the AI startup recently announced a major capital investment from Japan's SoftBank (TYO:9984). OpenAI and Softbank (OTC:SFTBY) announced a $500 billion venture to build more AI data centers in the U.S., with Microsoft playing a limited role in the project. Microsoft is still OpenAI's biggest investor, having backed the firm since at least 2019. OpenAI's flagship GPT models are used across Microsoft's AI offerings.

OpenAI plans to cut Microsoft revenue share after restructuring, The Information reports

(Reuters) -OpenAI has told investors it will share a smaller fraction of revenue with major backer Microsoft as it moves ahead with its restructuring, The Information reported on Tuesday. The ChatGPT-maker has dialed back a significant restructuring plan, with its nonprofit parent retaining control in a move that is likely to limit CEO Sam Altman's power over the firm. In financial projections shared with investors, OpenAI said the percentage of revenue shared with Microsoft would drop by at least half by the end of this decade, the report said. In an existing deal, OpenAI has agreed to share 20% of its revenue with Microsoft through 2030, the Information reported. OpenAI told some potential and current investors that it would only share 10% of revenues with commercial partners including Microsoft by 2030, the report said, citing private documents, adding that Microsoft wants access to OpenAI's technology beyond 2030. In January, Microsoft changed some key terms of a deal with OpenAI after its joint venture with Oracle and Japan's SoftBank Group to build up to $500 billion of new artificial intelligence data centers in the United States. Microsoft has said it has "revenue sharing agreements that flow both ways" with OpenAI, with the key elements of the partnership remaining in place for the duration of the contract through 2030. "We continue to work closely with Microsoft, and look forward to finalizing the details of this recapitalization in the near future," an OpenAI spokesperson told The Information. OpenAI and Microsoft did not immediately respond to Reuters' requests for comment outside regular business hours. (Reporting by Harshita Meenaktshi in Bengaluru; Editing by Mrigank Dhaniwala and Rashmi Aich)

OpenAI negotiates with Microsoft for new funding and future IPO, FT reports

(Reuters) -OpenAI and Microsoft are rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation designed to allow the ChatGPT maker to launch a future IPO, while protecting the software giant's access to cutting-edge AI models, the Financial Times reported on Sunday. A critical issue is how much equity in OpenAI's new for-profit business Microsoft will receive in exchange for the more than $13 billion it has invested in the company to date, the report said. It said Microsoft is offering to give up some of its equity stake in exchange for access to new technology developed beyond the 2030 cutoff. They are also revising the terms of a wider contract, first drafted when Microsoft initially invested $1 billion into OpenAI in 2019, the report said. OpenAI and Microsoft did not immediately respond to Reuters' requests for comment. OpenAI has told investors it will share a smaller fraction of revenue with its largest backer as it moves ahead with restructuring, The Information reported last week. In January, Microsoft changed some terms of a deal with OpenAI after entering a joint venture with Oracle and Japan's SoftBank Group to build up to $500 billion of new artificial intelligence data centers in the United States. (Reporting by Rhea Rose Abraham in Bengaluru; Editing by Emelia Sithole-Matarise and Bill Berkrot)

OpenAI talks to Microsoft over new funding, IPO plan

STORY: OpenAI is talking to Microsoft about rewriting the terms of their multibillion dollar partnership. That's according to a report by the Financial Times on Sunday. It says the plan is to allow the ChatGPT maker to launch an IPO in the future, while protecting Microsoft's access to cutting-edge AI models. One critical issue is how much equity the software giant will get in exchange for the more than $13 billion it has already plowed into OpenAI. The report says Microsoft could give up some equity in return for access to new technology developed beyond a current 2030 cutoff. The pair are also said to be revising a wider contract first agreed when the Windows maker invested an initial $1 billion in OpenAI in 2019. There was no immediate comment on the report from either party. Tech publication The Information said last week that OpenAI has told investors it will share less revenue with its top backer as it moves ahead with restructuring. The firm has recently dialed back plans to become a for-profit company, instead leaving its nonprofit parent organization in charge. In January, Microsoft changed some terms of a deal with OpenAI after it entered into a joint venture with Oracle and Japan's SoftBank to spend up to $500 billion developing new AI data centers in the U.S.