Microsoft, OpenAI Strike New Deal to Reshape Partnership

Microsoft and OpenAI announced on Thursday that they have signed a non-binding agreement to redefine the terms of their partnership, paving the way for OpenAI’s restructuring into a for-profit company. The move could allow the ChatGPT-maker to adopt a more conventional governance model and eventually pursue an initial public offering (IPO).

"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," both parties said in a joint statement.

While financial details of the revised commercial arrangements were not disclosed, both companies confirmed they are working toward a definitive agreement. Microsoft has invested heavily in OpenAI since 2019, including a $10 billion infusion in 2023, securing exclusive rights to sell OpenAI tools through its Azure platform.

However, OpenAI has since diversified its partnerships, striking multibillion-dollar compute deals with Oracle and Google.

OpenAI is also restructuring to pair its nonprofit roots with a new Public Benefit Corporation (PBC), ensuring mission-driven control while gaining financial strength. Under a non-binding agreement with Microsoft, the nonprofit will hold an equity stake exceeding $100 billion, making it one of the wealthiest philanthropic organisations globally.

This recapitalisation will fund OpenAI’s mission to ensure AGI benefits humanity while expanding community impact. The nonprofit has also launched a $50 million grant initiative to support AI literacy, community innovation, and economic opportunity. Regulatory approvals are pending in California and Delaware as OpenAI seeks to finalize the new structure.

Regulatory approvals remain a hurdle, with attorneys general in California and Delaware reviewing the restructuring plan. OpenAI aims to finalize the conversion by year’s end.