OpenAI and Microsoft have taken a significant step forward in their collaboration by signing a Memorandum of Understanding (MoU) that sets the foundation for the next phase of their partnership.
This new agreement specifically allows OpenAI to restructure its for-profit arm into a Public Benefit Corporation (PBC) while the nonprofit arm retains control and gains an equity stake of over $100 billion in the PBC.
This means that OpenAI, as it currently stands as an original nonprofit organization, will keep control over the new PBC by owning a significant equity stake valued at over $100 billion.
OpenAI’s restructuring means that while it can operate commercially, it will remain committed to its mission of advancing AI safely and responsibly. The equity stake will help ensure that the goals and values of OpenAI as a nonprofit continue to guide the AI giant’s work as it grows.
The MoU also paves the way for OpenAI to diversify its cloud providers beyond Microsoft, which includes new deals with Oracle and Google for cloud infrastructure. OpenAI recently signed a massive $300 billion deal with Oracle, another tech giant, to build an extensive network of data centers.
This initiative is part of Project Stargate that aims to develop large-scale infrastructure needed to train the next generation of AI technologies.
However, the road to this MoU was also riddled with tensions, which can be traced back to OpenAI’s Artificial General Intelligence (AGI) clause. The AGI clause is a provision in the ChatGPT-maker’s agreement with Microsoft that could terminate Microsoft’s access to OpenAI’s newest models if OpenAI declares it has achieved AGI.
AGI refers to highly advanced AI systems that can perform tasks as well as, or better than, humans. OpenAI’s CEO Sam Altman has repeatedly said the company is inching close to achieving AGI, which has also raised concerns about the company’s agreement with Microsoft.
Along with these structural changes, OpenAI also plans to reduce the revenue share it pays to Microsoft, from about 20% to 8% by the end of the decade. This means OpenAI will keep more of its earnings as it grows, giving the company increased financial independence while still maintaining its close ties with Microsoft.
Microsoft is also adjusting its AI plans, especially with its integration of other AI systems like Anthropic’s Claude into its Office 365 apps, shifting away from its exclusive reliance on OpenAI’s models.
As such, whether this MoU will further protect Microsoft’s access to OpenAI’s technology upon achieving AGI remains to be seen.
In a joint statement released by both companies, they both said they were “actively working to finalize contractual terms in a definitive agreement,” and that they “remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety.”
