OpenAI and Microsoft reach agreement paving way for $100 billion public benefit shift: Read joint statement

ChatGPT-maker OpenAI has announced that it has reached a nonbinding agreement with Microsoft, its largest investor, on a revised partnership that could allow the artificial intelligence startup to change its for-profit arm into a public benefit corporation (PBC). Issuing a joint statement via X, the company said “OpenAI and Microsoft have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership.” “We are actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety,” it added.In a blog post, OpenAI board chairman Bret Taylor said the nonprofit that currently oversees the company would continue to control operations under the new plan. The nonprofit would also hold a stake in the future PBC, valued at more than $100 billion. Other details of the agreement were not disclosed.OpenAI and Microsoft described the arrangement as a “nonbinding memorandum of understanding” (MOU), which sets out intent but is not legally enforceable. Taylor said OpenAI and Microsoft will work with attorneys general in California and Delaware on the transition plan. Approval is needed before the partnership changes take effect.The announcement follows months of talks between OpenAI and Microsoft about restructuring. OpenAI is unusual among startups because it is controlled by a nonprofit board. That board drew global attention in 2023 when it briefly removed CEO Sam Altman, only to reinstate him days later.Under the current partnership, Microsoft has preferred access to OpenAI’s technology and provides its main cloud services. But as OpenAI’s business has grown, the company has sought more flexibility. It recently signed a $300 billion, five-year cloud deal with Oracle starting in 2027 and partnered with SoftBank on its Stargate data center project.