OpenAI restructures, enters ‘next chapter’ of Microsoft partnership

OpenAI has completed a major reorganization and, at the same time, signed a new definitive partnership agreement with Microsoft.

Starting with the reorganization of OpenAI, the goal is to solidify the nonprofit’s control over the for-profit business and establish the newly named OpenAI Foundation as a global philanthropic powerhouse, with shares in the commercial arm valued at about $130 billion.

This reorganization, which OpenAI says “maintains the strongest representation of mission-focused governance in the industry today,” effectively turns the company’s commercial success into a direct line of funding for its original mission.

The for-profit entity is now a public benefit corporation called OpenAI Group PBC, which is legally bound to this mission. As this foundation grows, so does the foundation’s $130 billion stake, which will be used to fund an initial $25 billion commitment to global health and AI resilience.

This restructuring was completed after nearly a year of “constructive dialogue” with the attorneys general’s offices in California and Delaware. OpenAI acknowledged that it “made many changes as a result of those discussions” and expressed its belief that the company, and thus the audience it serves, is “better for them.”

The other aspect of this new structure is the redefined partnership with Microsoft. The tech giant’s investment is now worth $135 billion, giving it a 27 percent stake in OpenAI Group PBC. This represents a slight dilution from its previous stake of 32.5%, reflecting the new financing rounds. The agreement maintains Microsoft’s core position as the exclusive provider of the Azure API for OpenAI frontier models, but only until artificial general intelligence (AGI) is achieved.

The new conditions provide a new examination of this path. Any announcement of artificial general intelligence (AGI) by OpenAI must now be verified by an independent panel of experts. This external examination is a major update to partnership management. Microsoft’s intellectual property rights have also been extended until 2032, and now include models developed after the announcement of artificial general intelligence (AGI), with appropriate safety guardrails.

Microsoft can now also pursue AGI independently, either on its own or with other partners. This gives Microsoft a new path forward, separate from its reliance on OpenAI research. If Microsoft uses OpenAI’s IP to develop AGI before officially announcing it, these models will be subject to much greater computational thresholds than systems in use today.

But the new freedoms cut both ways. OpenAI has also ensured new flexibility. It has committed to purchasing an additional $250 billion worth of Azure services, but Microsoft no longer has right of first refusal as its compute provider. This gives OpenAI new leverage in its infrastructure negotiations.

The company can now also launch open-weight models that meet certain standards and serve US government national security customers on any cloud, a notable new capability. It also gains the ability to co-develop certain non-API products with third parties, although API products developed with others must remain on Azure. Microsoft’s intellectual property also specifically excludes any future consumer OpenAI devices.

The current revenue sharing agreement remains in place until the expert panel verifies AGI, although payments will be extended over a longer period. The two companies crafted the new chapter as a way to continue innovating. This new architecture provides the potential to push the boundaries of AI and an updated model “to ensure progress serves everyone,” OpenAI concluded.

See also: OpenAI connects ChatGPT with enterprise data to visualize knowledge

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