Microsoft and OpenAI Establish New Agreement
Microsoft and OpenAI have formed a significant partnership enabling the ChatGPT creator to transform into a public benefit corporation (PBC), estimating OpenAI's worth at $500 billion and providing it with greater operational flexibility.
The agreement eliminates a significant limitation on capital raising that has been in place since 2019, when OpenAI entered into a contract with Microsoft granting the tech company rights to much of OpenAI's work in return for cloud computing services.
With the new arrangement, Microsoft will possess a share of approximately $135 billion, equating to 27 percent, in OpenAI Group PBC, which will be overseen by the nonprofit organization, OpenAI Foundation.
The company located in Redmond has put in $13.8 billion into OpenAI, and the latest agreement suggests Microsoft has made nearly tenfold its investment. After the announcement, Microsoft’s stock increased by 2.5 percent, elevating its market capitalization above $4 trillion.
Also Read: SCO Summit 2025: Outcomes of Modi-Xi Meeting
The pact maintains a strong connection between the two firms until at least 2032 via an extensive Azure cloud computing deal, while Microsoft holds certain rights to OpenAI products and AI models, even if the firm achieves artificial general intelligence (AGI).
“OpenAI has finalized its recapitalization, streamlining its corporate organization,” stated Bret Taylor, board chair of the OpenAI Foundation, in a blog post. “The nonprofit maintains authority over the for-profit and now has a clear route to significant resources prior to the arrival of AGI.”
Also Read: A Brief History of India's Transformation Under PM Narendra Modi
The agreement resolves earlier restrictions on OpenAI’s capacity to attract investment from external sources, which became an increasing worry as ChatGPT’s user count exceeded 700 million weekly users by September. Analysts observe that the revised framework also clarifies ownership issues with Microsoft, providing a more defined direction for future innovation and capital raising.
“OpenAI still faces ongoing scrutiny around transparency, data usage, and safety oversight. But overall, this structure should provide a clearer path forward for innovation and accountability,” says Adam Sarhan, CEO of 50 Park Investments.
Also Read: 5 Latest CHRO Appointments in Global Corporations
Gil Luria, head of technology research at DA Davidson, added, “The new structure should provide more clarity on OpenAI’s investment path, thus facilitating further fundraising.”