Both companies signed a non-binding memorandum outlining “the next phase” of their relationship, with a definitive agreement expected in the coming months. The announcement was light on details; financial small print was not disclosed, and the companies said they are still finalizing contractual terms.
“Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety,” the companies said in a Thursday statement.
OpenAI’s corporate structure is unusual. Originally founded as a nonprofit, it established a capped-profit arm in 2019, which allowed for large investments such as Microsoft’s. The company has been trying to restructure its profit-focused entity into a more conventional corporate model to allow it to raise additional capital, while leaving the nonprofit parent in control of the startup’s operations. A conversion to a more traditional structure, such as a Public Benefit Corporation, could allow the company to combine its public mission objectives with profit generation and possibly go public in the future.
Microsoft was an early investor in OpenAI and has cumulatively invested at least $13 billion in the AI startup since 2019. In exchange, the tech giant has received a share of the revenue from OpenAI’s products, including ChatGPT, and has embedded the company’s technology into Microsoft 365 products. However, the partnership has reportedly become strained as both companies scale their AI ambitions.
The news of a deal was well-received by investors, with Microsoft’s stock rising 2.4% in after-hours trading following the announcement.
When asked for further details about the agreement, representatives for Microsoft and OpenAI referred Fortune to the companies’ joint statement.
However, the transition still needs to be cleared by state regulators.
Taylor wrote in the post: “Our PBC charter and governance will establish that safety decisions must always be guided by this mission. We continue to work with the California and Delaware Attorneys General as an important part of strengthening our approach, and we remain committed to learning and acting with urgency to ensure our tools are helpful and safe for everyone, while advancing safety as an industry-wide priority.”
He also said that as part of this next phase, the company’s nonprofit has begun considering applications for the first wave of a $50 million grant initiative that aims to support nonprofit and community organizations in the areas of AI literacy, community innovation, and economic opportunity.
