After nearly a year of negotiations with its longtime backer Microsoft, OpenAI has granted the latter a 27% stake . This move eliminates significant uncertainty for both companies and paves the way for the ChatGPT developer to become a for-profit venture.
In a statement released Tuesday, both companies said that under the revised agreement, Microsoft will acquire approximately $135 billion in OpenAI stock . Additionally , Microsoft will have access to the artificial intelligence (AI) startup’s technology through 2032, including models that have already reached the benchmark for artificial general intelligence (AGI).
OpenAI has spent much of this year pushing for restructuring, transforming into a more traditional for-profit company ; Microsoft, which has invested about $13.75 billion, has been the biggest obstacle among OpenAI investors.
“OpenAI has completed a capital restructuring and simplified its corporate structure,” OpenAI President Bret Taylor said in a statement . “The nonprofit still controls the for-profit entity, granting it direct access to critical resources prior to AGI’s arrival.”
As part of the restructuring, OpenAI’s nonprofit arm, the OpenAI Foundation , will also receive approximately $130 billion in capital. The foundation plans to initially focus on funding projects such as “accelerating healthcare innovation.”
OpenAI said its co-founder and CEO, Sam Altman, will not receive any equity stake in the newly restructured company.
Microsoft shares rose as much as 4.2% on Tuesday, reaching $553.72 . Many Wall Street analysts believe the changing relationship with OpenAI has been a major source of uncertainty for the software company in the past.
Industry research analyst Anurag Rana said that Microsoft’s retention of intellectual property rights to OpenAI products and models until 2032 is “the most important point” of the revised agreement. “Microsoft is developing its own models, while also using OpenAI or Anthropic models in its Copilot product.”
A key point in the months-long negotiations between Microsoft and OpenAI was what would happen after OpenAI reached AGI (Artificial General Intelligence), which is artificial intelligence that surpasses human capabilities in most tasks . Under the new agreement, this threshold must be verified by an “independent panel of experts,” and once it’s reached, Microsoft will no longer receive any share of OpenAI’s revenue.
Azure was long OpenAI’s exclusive supplier, but Microsoft later allowed it to purchase services from other vendors like Oracle, while retaining Microsoft’s right of first refusal. OpenAI will invest another $250 billion in Azure.
Both parties stated that Microsoft’s rights to use OpenAI technology will not include consumer hardware. OpenAI will also have the option to “jointly develop certain products with third parties.”
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