OpenAI has finally completed its long-sought restructuring into a for-profit entity, with Microsoft retaining a 27% stake in the new $500 billion company.
The restructuring, which rids the company of restrictions on profits, took nearly a year to complete and drew both regulatory scrutiny and a lawsuit from original co-founder Elon Musk, who sought to block the move.
The OpenAI Foundation, the company’s nonprofit arm, will now have a 26% stake valued at $130 billion.
Founded as a nonprofit in 2015, OpenAI in the last couple of years has been angling to become a for-profit entity.
The new company is structured as a public-benefit corporation, an unusual structure for a venture-backed business of OpenAI’s size.
It grants OpenAI the flexibility of a traditional for-profit, while legally requiring its board to balance shareholder value with societal interests.
The restructuring also settles the controversy over OpenAI’s board and governance. Nearly two years ago, OpenAI’s nonprofit board—which oversaw the for-profit arm— fired founder Sam Altman as CEO. He was reinstated after a tumultuous week of advocacy from investors and employees.
The deal comes as OpenAI continues its unprecedented growth. Nvidia in September agreed to deploy up to $100 billion into the company, including a partnership for OpenAI to train its models on at least 10 gigawatts of Nvidia chip capacity.
Investors, regulators and users have increasingly pointed to a range of societal problems that they say OpenAI’s ChatGPT has intensified, including overuse of AI and the spread of misinformation.
The company has also lost some of its top talent as former execs have gone on to land sizable VC checks for their own startups or departed to competitors, like Meta.
In March, OpenAI inked the then-largest single venture capital deal on record with a $40 billion commitment, much of that amount from Softbank, and doubling its preceding valuation to $300 billion.
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