• Source:JND
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Following several months of tension, OpenAI and Microsoft have struck a new partnership that will determine the future of these two companies. On Thursday, the two firms revealed that they have signed a non-binding memorandum of understanding (MoU), to mark the first step into the “next phase” of their cooperation.

Financial details were not disclosed, but the parties said in a statement that the deal doesn’t change things for OpenAI on several fronts: It remains free to move its for-profit operation into a so-called Public Benefit Corporation (PBC) and neither does it limit access for the non-profit parent to equity in the new organization.

Background: The Stalemate Between OpenAI and Microsoft

The division started earlier this year when OpenAI said it would transform its capped-profit structure into a PBC. Microsoft has pumped more than $13 billion into OpenAI since 2019, receiving first access to its models and a share of profits from ChatGPT and the company’s enterprise services.

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But Microsoft’s investment also provided it with contractual rights to any major structural changes. The deletion of OpenAI’s 100x capped-profit provision which no longer would be possible under a PBC framework ran the risk of materially changing Microsoft’s commercial terms and the company refused to approve it.

The standoff reportedly became so fraught that OpenAI even contemplated accusing Microsoft of monopolistic behavior—an option that could prompt regulators to intervene in the matter.

The MoU: A Path Forward

The latest signed MoU seems to have broken the impasse. The companies are ironing out the details of a definitive agreement that would provide OpenAI with the necessary legal structure to go forward with its PBC conversion, the people said.

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OpenAI also made a point in another announcement – the non-profit would receive an ownership stake in the PBC. That equity alone, valued at $100 billion or more, would not only drastically boost the nonprofit’s resources. The money is supposedly earmarked for:

  • AI literacy and public understanding
  • Community innovation
  • Economic opportunity initiatives

Why This Matters

Transitioning to a PBC structure could make OpenAI more appealing to investors who don't wish to see their profits capped, as well as prepare the company for an IPO down the road. Meanwhile, Microsoft continues to be an invaluable partner and access to OpenAI models will only strengthen their cloud and AI offerings further.

As for AI as an ecosystem, this incident highlights just how precarious it can be to balance innovation, corporate partnerships, and governance models that focus on both profit and public good simultaneously.