OpenAI and Microsoft sign agreement to restructure OpenAI into a public benefit corporation with Microsoft retaining 27% stake — non-profit ‘Open AI Foundation’

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(Image credit: Open AI / Microsoft) OpenAI has been at the forefront of the rapidly expanding artificial intelligence industry for years, with ChatGPT largely responsible for ushering in this new era of technology. Microsoft was an early believer in the company, investing $1 billion back in 2019 in exchange for becoming OpenAI’s exclusive cloud partner and gaining the right to commercialize its models through Azure. Today, that agreement is changing — marking what could be a seismic shift in the AI landscape.

OpenAI and Microsoft have reached a deal to restructure OpenAI from the inside, transforming its for-profit arm into a new public benefit corporation called OpenAI Group PBC. The new company will still be overseen by OpenAI’s original nonprofit parent (renamed the OpenAI Foundation) with the goal of simplifying governance, streamlining equity, and catalyzing AGI progress. OpenAI will now be able to move with far more agility, retaining freedom, while still protecting its mission statement.

For those unaware, OpenAI was founded in 2015 as a nonprofit dedicated to developing AI for the benefit of humanity. But the founders soon realized that the resources (and compute) required to scale up was far beyond what a nonprofit model could sustain. To attract outside investment, OpenAI created a capped-profit subsidiary in 2019 called OpenAI LP, which allowed stakeholders to earn a capped return on their investment until a certain degree — after which profits reverted to the nonprofit’s original mission.

Microsoft's OpenAI losses hidden as part of $4.7 billion 'other' expense

Key considerations

• Investor positioning can change fast
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Reference reading

• https://www.tomshardware.com/tech-industry/artificial-intelligence/SPONSORED_LINK_URL
• https://www.tomshardware.com/tech-industry/artificial-intelligence/openai-and-microsoft-sign-agreement-to-restructure-openai-into-a-public-benefit-corporation-with-microsoft-retaining-27-percent-stake-non-profit-open-ai-foundation-to-oversee-open-ai-pbc#main
• https://www.tomshardware.com

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