OpenAI, Microsoft ink MoU to allow ChatGPT maker restructure its nonprofit-controlled model

OpenAI and Microsoft said on Thursday they have signed a non-binding memorandum of understanding (MOU) to extend their partnership, as the ChatGPT maker seeks fresh funding and a new governance structure that could pave the way for a future public listing.

The companies did not disclose the financial terms of the arrangement, but said they are working to finalise a definitive agreement.

The deal marks a step forward in OpenAI’s prolonged talks with Microsoft, its biggest backer, which has invested more than $11 billion since 2019.

Under the previous pact, Microsoft gained exclusive rights to resell OpenAI’s software via its Azure cloud and priority access to the startup’s technology.

Microsoft was once OpenAI’s sole compute provider, but this year OpenAI loosened that tie, signing long-term contracts worth about $300 billion with Oracle and a cloud agreement with Google to support its massive infrastructure project known as Stargate.

As OpenAI’s annual revenue climbs into the billions, the San Francisco firm is reshaping itself under a more conventional corporate structure.

The company plans to convert its unusual capped-profit model into a public benefit corporation (PBC), still controlled by its nonprofit parent.

The nonprofit would hold both governance authority and an equity stake in the PBC expected to exceed $100 billion, according to a memo from OpenAI chair Bret Taylor.

That would make the nonprofit one of the most heavily resourced philanthropic organisations in the world, while allowing OpenAI to raise capital to fund artificial intelligence development.

OpenAI also announced a $50 million grant program for nonprofits and community groups focused on AI literacy, local innovation, and economic opportunity.

Microsoft, meanwhile, is seeking to preserve long-term access to OpenAI’s technology, even if OpenAI one day declares its models to have reached artificial general intelligence, a milestone that would automatically end the partnership under current terms.

However, regulatory approval remains a hurdle, with attorneys general in California and Delaware reviewing OpenAI’s planned governance changes.

The company has said it hopes to complete the conversion by year-end, warning it risks losing billions in funding if delayed.

“Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety,” the companies said in a joint statement.