OpenAI’s for-profit restructuring is complete, making broad changes to its relationship with Microsoft and shifting how the company will operate going forward.
While Microsoft still looms large over OpenAI, the new structure grants new freedoms to the ChatGPT maker, and clarifies who gets access to the technology when—and if—it develops artificial general intelligence (AGI).
With its parent entity now valued at $500 billion, OpenAI has raised a total of $57 billion in capital commitments. Of that, more than $13 billion has come from Microsoft.
Here’s a breakdown of the key changes and how they affect OpenAI’s relationship with Microsoft.
Cap table changes
Microsoft remains OpenAI’s largest stakeholder, retaining a 27% stake in the newly formed OpenAI Group, which is valued at approximately $135 billion. OpenAI’s nonprofit arm is the new parent entity’s second-largest shareholder, with a 26% stake that’s valued at $130 billion.
Microsoft previously held a 32.5% stake on an “as-converted basis in the OpenAI for-profit.” Its new ownership is “on an as-converted diluted basis, inclusive of all owners.”
Existing investors and employees hold 47% of the company, though OpenAI declined to share more details.
Post-AGI IP rights
The restructuring deal resolves what happens with Microsoft’s IP rights to OpenAI’s technology when (and if) the company reaches AGI, the hypothetical point at which the technology can think and learn like humans.
Under the previous structure, Microsoft would have lost rights to OpenAI’s technology when it reached AGI. Now, an independent expert panel will have to verify and confirm whether the company’s technology has indeed reached that milestone. Microsoft now also retains rights to OpenAI’s models and products through 2032, which includes “models post-AGI, with appropriate safety guardrails,” per the official announcement.
The new structure also clarifies two other important aspects of Microsoft’s rights to OpenAI’s IP. First, Microsoft’s rights to OpenAI’s research (not commercial products) will last only until 2030 or when AGI is confirmed to have been reached, whichever comes first. This includes the methods OpenAI uses to develop its models and systems.
Secondly, Microsoft no longer has IP rights over any consumer hardware device that OpenAI develops. This means OpenAI is free to pursue its partnership with former Apple design head Jony Ive, whose AI device startup it acquired for $6.6 billion in May, without involvement from Microsoft.
Revenue split
OpenAI has reportedly been sharing 20% of its revenue with Microsoft. The new agreement clarifies that this revenue sharing will remain in effect until an expert panel confirms OpenAI has developed AGI. Payments will now be made over a longer period, according to Microsoft.
Looser leash
OpenAI is now free to partner and develop products with other parties. Microsoft also no longer has the exclusive rights to be OpenAI’s main provider of compute resources through its Azure division. Still, OpenAI has inked a deal to purchase an additional $250 billion of Azure services.
This also means that OpenAI can finally sell access to its application programming interface (API) to US government agencies and national security customers, regardless of the cloud provider.
OpenAI can now also release some of its open-weight models—models that are released in their entirety, along with instructions on how they were trained. Open-weight models can be modified and downloaded freely, unlike models that are accessible only through an API or website.
But the looser leash goes both ways: Microsoft can now independently pursue AGI on its own, or with other partners.
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