Microsoft and OpenAI have finalized a deal allowing the AI firm to restructure as a public-benefit corporation, removing restrictions that limited its fundraising since 2019. The restructuring values OpenAI at $500 billion and gives it greater flexibility in business operations and partnerships.
Under the agreement, Microsoft will retain a 27% stake in OpenAI Group PBC, worth approximately $135 billion. The new public-benefit corporation will remain under the control of the OpenAI Foundation, a nonprofit organization. The simplified structure is designed to support future growth while maintaining oversight from the foundation.
OpenAI board chair Bret Taylor said the restructuring provides the nonprofit with a “direct path to major resources” as it works toward achieving artificial general intelligence (AGI), where AI matches human-level cognitive abilities.
The deal also addresses longstanding tensions between Microsoft and OpenAI. In 2019, Microsoft agreed to provide cloud computing services in exchange for rights over OpenAI’s outputs. As ChatGPT usage surged, OpenAI’s computing needs exceeded expectations, limiting its ability to raise funds or form new partnerships.
With the restructuring, Microsoft will no longer have exclusive cloud rights. OpenAI will now purchase $250 billion worth of Microsoft Azure services, and Microsoft has waived rights to OpenAI-developed hardware, including assets from its acquisition of io Products, formerly led by Apple’s Jony Ive.
Microsoft’s $13.8 billion investment in OpenAI has yielded nearly a tenfold return. Following the announcement, Microsoft shares rose 2.5%, briefly raising its market capitalization above $4 trillion. The partnership will continue at least through 2032, ensuring Microsoft retains access to OpenAI’s AI models and products. An independent panel will verify any AGI milestone.
Industry analysts say the deal clarifies ownership rights and future investment opportunities. DA Davidson’s Gil Luria stated the restructuring resolves questions about OpenAI’s nonprofit origins and Microsoft’s claims. Experts also note the structure provides a clearer path for innovation and accountability while raising ongoing questions about governance, data use, and AI safety.
The announcement coincided with Nvidia’s strategic investment in Nokia and preceded Microsoft CEO Satya Nadella’s address at the company’s developer event, where AI collaborations are expected to be a key focus.
In other news read more about: Microsoft Partners with Elon Musk’s xAI to Host Grok Amid Backlash and AI Push
