Next Phase of Microsoft and OpenAI Partnership Announced

Highlights

• Partnership Update: Microsoft and OpenAI have signed a non-binding memorandum of understanding for the next phase of their collaboration.
• Equity Stake: OpenAI is granting an equity stake worth at least $100 billion to its nonprofit arm.
• Transition Plans: OpenAI is planning to transition into a public benefit corporation, which allows for raising capital through conventional means.
• Profit Sharing: Microsoft has invested over $13 billion into OpenAI and will receive 49 percent of future profits.

Microsoft and OpenAI have issued a joint statement to say that they have signed a non-binding memorandum of understanding for the “next phase” of their partnership. The companies are still finalizing the terms of agreement and haven’t shared the details of what their future would look like exactly. But according to The New York Times, the deal includes how the parties share technology and the revenue from those technologies. The new agreement also reportedly modifies the clause in the original, which states that Microsoft cannot access OpenAI’s most powerful technology if its board decides that it has reached human-like artificial general intelligence or AGI.

In addition to the new deal, The Times says OpenAI is giving an equity stake worth at least $100 billion to its nonprofit arm that will continue to oversee and control the organization. As the publication notes, a change in the company’s agreement paves the way for OpenAI to transition into a public benefit corporation, a type of corporation that’s meant to make a positive impact on society, and for an eventual IPO. OpenAI had to reach an acceptable agreement with Microsoft first, including how much equity it’s getting in the AI firm’s for-profit arm. Microsoft had invested over $13 billion into OpenAI and is entitled to 49 percent of its future profits.

Reports about OpenAI moving away from its complicated non-profit structure started coming out last year. After Christmas in 2024, it officially announced its plan to transform itself into a public benefit corporation with ordinary shares of stock. “It will enable us to raise the necessary capital with conventional terms like others in this space,” it said at the time. In May, however, OpenAI announced that it was no longer going to remove the control of its for-profit arm from its non-profit board. “OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit,” it said.