OpenAI and its largest investor, Microsoft, have reached a non-binding agreement on a revised partnership designed to allow OpenAI's for-profit arm to transition into a Public Benefit Corporation (PBC). The move, if cleared by state regulators, could facilitate future capital raises and a potential public listing for the artificial intelligence developer.
According to OpenAI Board Chairman Bret Taylor, the non-binding memorandum of understanding (MOU) stipulates that OpenAI's nonprofit entity will retain control over operations and obtain a stake in the PBC valued in excess of $100 billion. The companies, in a joint statement, confirmed their intention to finalize definitive contractual terms for the next phase of their partnership.
This agreement concludes months of negotiations regarding OpenAI's unusual corporate structure, where a nonprofit board oversees its for-profit operations. This governance model gained prominence in 2023 following the brief removal and subsequent reinstatement of CEO Sam Altman. The transition comes as OpenAI's business, driven by products like ChatGPT, has expanded significantly since Microsoft's initial investment in 2019.
While Microsoft is currently designated as OpenAI's primary cloud services provider under their existing arrangement, OpenAI has actively pursued broader infrastructure partnerships. Recent reports indicate a $300 billion, five-year contract with cloud provider Oracle commencing in 2027, alongside a collaboration with the Japanese conglomerate SoftBank on the Stargate data center project. These initiatives signal a strategic diversification of its operational dependencies.
The transition plan requires regulatory approval, with discussions ongoing with the California and Delaware Attorneys General. The negotiations unfolded amid reported tensions, including a dispute over the intellectual property of AI coding startup Windsurf, an acquisition that ultimately did not proceed. Additionally, the for-profit conversion is a central aspect of an ongoing lawsuit filed by Elon Musk, who had previously submitted a $97 billion takeover bid for OpenAI, a bid that was rejected by the company's board.
