- By Prateek Levi
- Sun, 14 Sep 2025 05:12 PM (IST)
- Source:JND
OpenAI and Microsoft have taken a major step forward in resolving a long-running disagreement over OpenAI’s business structure. On Thursday, they signed a non-binding memorandum of understanding (MoU) that marks the beginning of their next chapter together. Although the full financial or contractual details are not yet public, the agreement confirms that Microsoft is not blocking OpenAI’s plan to convert its for-profit arm into a Public Benefit Corporation (PBC) — nor restricting the nonprofit arm’s access to equity.
In a joint statement, both companies said: “OpenAI and Microsoft have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership. We are actively working to finalise contractual terms in a definitive agreement.”
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This MoU appears to finally resolve a sticking point—Microsoft had been reluctant to approve OpenAI’s transition because the plan removes its “capped profit” status, announced in May, which alters how profits and governance are handled.
In the new setup, the nonprofit parent of OpenAI will maintain control over the company and get an equity share in the PBC, worth more than $100 billion. The nonprofit will also be expected to keep exercising its oversight, ensuring the mission of the organisation remains at the core.
The California and Delaware regulators must still approve the switch. Once completed, the shift will enable OpenAI to raise more capital with ease, possibly go public, and increase partnerships beyond Microsoft.