Microsoft and OpenAI Strike New Agreement as Startup Eyes IPO Path

Microsoft and OpenAI have reached a fresh agreement that could pave the way for the AI startup’s highly anticipated public listing. OpenAI, recently valued at $500 billion, is in the process of restructuring its nonprofit model to support its evolving business ambitions.In a joint statement released Thursday, both companies confirmed progress on the “next phase” of their partnership.

Microsoft & OpenAI:

Microsoft and OpenAI 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.

Microsoft has invested $13 billion in OpenAI since 2019 and continues to benefit from revenue sharing tied to ChatGPT and its API. However, the relationship has grown more complex as OpenAI expands its cloud partnerships and Microsoft increases reliance on its own AI models.

During a company town hall, Microsoft CEO Satya Nadella and AI chief Mustafa Suleyman emphasized plans for “significant investments” in in-house development. Suleyman added, “We should have the capacity to build world class frontier models in house of all sizes, but we should be very pragmatic and use other models where we need to.”

OpenAI also disclosed a crucial detail: its nonprofit parent company will continue holding authority over the for-profit entity, maintaining an equity stake valued at more than $100 billion.

Despite this progress, OpenAI’s restructuring plan has drawn scrutiny. Some philanthropies and nonprofits have expressed concern, while the attorneys general of California and Delaware have opened investigations into the company’s governance model. In its announcement, OpenAI said, “We continue to work with the California and Delaware Attorneys General as an important part of strengthening our approach, and we remain committed to learning and acting with urgency to ensure our tools are helpful and safe for everyone, while advancing safety as an industry-wide priority.”