Microsoft and OpenAI signed a non-binding deal for new relationship terms that would let OpenAI restructure into a for-profit company. The companies said they plan to finalize a definitive agreement. According to CNN, this marks a new phase in one of the most high-profile AI partnerships.
OpenAI seeks new structure and capital
OpenAI aims to raise capital under a more common governance structure and later go public to fund AI work. Under the current setup, Microsoft invested $1 billion in 2019 and another $10 billion at the beginning of 2023.
The previous agreement gave Microsoft exclusive rights to sell OpenAI’s software tools through Azure and preferred access to its technology. Microsoft was once the sole compute provider. This year, it loosened that role to let OpenAI pursue its own data center project, Stargate.
Cloud deals and revenue goals
CNN reported that OpenAI signed $300 billion worth of long-term contracts with Oracle and made another cloud deal with Google. As OpenAI’s revenue grows into the billions, it wants more cloud partners to expand sales and secure computing capacity.
Microsoft wants continued access to OpenAI’s technology even if OpenAI declares its models have reached humanlike intelligence. Under existing terms, that milestone would end the current partnership.
Ownership, nonprofit funds, and approvals
The companies did not disclose how much of OpenAI Microsoft will own. They also did not say whether Microsoft will keep exclusive access to OpenAI’s latest models and technology.
OpenAI said its nonprofit arm will receive more than $100 billion under current terms. That is about 20% of the $500 billion valuation it is seeking in private markets. Bret Taylor, chairman of OpenAI’s current nonprofit board, shared those details in a memo cited by CNN.
Regulatory approvals are still needed. Attorneys general in California and Delaware must 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 also compete in products, from consumer chatbots to business AI tools. Microsoft is developing its own AI models to reduce dependence on OpenAI’s technologies. CNN said the new non-binding deal sets the stage for both firms to refine their ties while they build and sell AI systems.
