OpenAI and Microsoft Announce New Deal as the Startup Plans For-Profit Restructuration

OpenAI and Microsoft released a joint statement yesterday to announce a new deal as they prepare for the next phase of their partnership. While the two companies said they are working to finalize the terms of the deal, OpenAI simultaneously announced that it was giving its non-profit parent, which will continue to oversee the company as it plans to restructure, an equity stake exceeding $100 billion.

“OpenAI and Microsoft have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership. 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 two companies said in their joint statement yesterday.

In recent years, Microsoft invested over $13 billion into OpenAI and became the largest investor in the AI startup. This allowed Microsoft to get preferred access to OpenAI’s technology, but tensions started to rise in recent months as the AI startup tried to revise the terms of the partnership. OpenAI needed Microsoft’s approval to transform its for-profit arm into a public benefit corporation (PBC), which will determine the startup’s capacity to raise money and eventually go public.

Microsoft’s previous contract with OpenAI also included a clause that will make Microsoft lose access to the startup’s technology once it reaches its goal to create “artificial general intelligence,” a type of AI that matches or surpasses human cognitive capabilities. According to a report from the New York Times citing one person familiar with the agreement, “this clause remains part of the new agreement but has been modified.”

While OpenAI and Microsoft are still discussing the next phase of their partnership, the ChatGPT maker continues to make bold moves to support its growth. Earlier this week, the company announced a $300 billion cloud deal with Oracle to build new data centers over the next five years.