Microsoft & OpenAI sign non-binding agreement approving latter's restructuring plans

Microsoft and OpenAI are entering a new phase in their high-profile alliance. Both companies have officially reached a non-binding agreement that reshapes fresh commercial terms.

The decision comes as OpenAI is moving forward with its plan to restructure into a for-profit company. By doing so, the AI giant is looking to raise capital and eventually pursue a public listing.

Currently, there’s no information available on the financial details of the revised arrangement. However, both sides have hinted that talks are progressing toward a definitive agreement. As you may know, OpenAI is now racking up billions in revenue.

With this move, OpenAI wants to transition toward a more conventional governance structure. That too, while diversifying its cloud partnerships beyond Microsoft.

Microsoft, however, is still eyeing continued access to OpenAI’s technology, as the AI developer races toward human-level intelligence benchmarks. The tech giant has already invested more than $11 billion into the partnership since 2019 and previously had exclusive rights to commercialize OpenAI’s software through Azure.

Under OpenAI’s proposed structure, its non-profit arm would retain around 20% of the company’s $500 billion valuation, according to internal board communications. This makes it one of the wealthiest nonprofits in existence.

All that said, it requires approval from regulators in California and Delaware. That’s not all; it must be finalized before the year’s end to secure billions in tied-up funding.