OpenAI, an AI research company, announced that it has signed a non-binding memorandum of understanding (MOU) with technology company Microsoft to advance the next stage of their partnership. The companies are working to finalize the contractual terms in a definitive agreement, with a shared focus on developing AI tools that prioritize safety and accessibility. The revised partnership would also enable the startup to restructure its for-profit arm as a public benefit corporation (PBC).
If approved by state regulators, the transition could enable OpenAI to secure additional investment capital and potentially pursue a public offering in the future.
According to a blog post by OpenAI board chairman Bret Taylor, under the MOU, OpenAI’s nonprofit would continue to exist and maintain control over the company’s operations. The nonprofit is expected to receive a stake in OpenAI’s public benefit corporation valued at over $100 billion, though further details of the agreement have not been disclosed.
The development appears to conclude months of discussions between OpenAI and Microsoft regarding the ChatGPT creator’s transition plans. Unlike most startups, OpenAI is governed by a nonprofit board, a structure that in 2023 enabled board members to remove CEO Sam Altman, who was reinstated a few days later, leading to the resignation of several board members. Despite these events, the same governance framework remains in place.
Under the existing agreement, Microsoft is intended to have preferred access to OpenAI’s technology and serve as the company’s primary cloud services provider. However, ChatGPT has grown since Microsoft’s initial investment in 2019, and OpenAI has reportedly aimed to reduce the cloud provider’s level of control as part of the current negotiations.
Over the past year, OpenAI has pursued deals designed to lessen its reliance on Microsoft. These include a contract to spend $300 billion with cloud provider Oracle over a five-year period beginning in 2027, as well as a partnership with Japanese conglomerate SoftBank on its Stargate data center initiative.
In a blog post, Bret Taylor also stated that OpenAI and Microsoft will continue coordinating with the attorneys general of California and Delaware regarding the transition plan, indicating that the agreement still requires regulatory approval before it can be finalized.
Reports suggest that tensions between OpenAI and Microsoft over the negotiations intensified in recent months. Microsoft sought control over the technology owned by Windsurf, an AI coding startup that OpenAI had intended to acquire earlier in the year, while OpenAI aimed to retain independent ownership of the startup’s intellectual property. Ultimately, the acquisition did not proceed, with Windsurf’s founders joining Google and the remaining staff being hired by another startup, Cognition.
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