Microsoft Corp. and OpenAI have finalized a landmark agreement that cements their long-term partnership and removes lingering uncertainty for both companies’ investors. The deal paves the way for OpenAI — creator of ChatGPT — to fully transition into a for-profit business structure.
Under the revised terms, Microsoft will acquire a 27% ownership stake in OpenAI valued at approximately $135 billion, the companies announced on Tuesday. The tech giant will also retain exclusive access to OpenAI’s technology until 2032, including advanced models capable of reaching artificial general intelligence (AGI) benchmarks.
The agreement marks a major breakthrough for OpenAI, which has been seeking to simplify its governance and restructure into a more conventional for-profit entity. Microsoft — a key investor that has contributed around $13.75 billion to OpenAI — had been the final major stakeholder to approve the new structure, according to Bloomberg News.
“OpenAI has completed its recapitalization, simplifying its corporate structure,” said Bret Taylor, OpenAI’s chairman. “The nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives.”
As part of the restructuring, the OpenAI Foundation — the nonprofit arm — will receive an equity stake valued at roughly $130 billion. The foundation will focus on funding initiatives aimed at “accelerating health breakthroughs” and other global-impact projects.
Following the announcement, Microsoft’s shares surged nearly 4% in early trading, as investors welcomed the clarity around the partnership.
One of the key points in the months-long negotiation was how profits and control would shift once OpenAI achieves AGI — a milestone defined as AI outperforming humans in most economically valuable tasks. Under the new deal, AGI achievement must be verified by an independent expert panel, after which Microsoft will no longer receive a share of OpenAI’s revenue.
Additionally, Microsoft loses its right of first refusal for new cloud infrastructure deals from OpenAI. While Azure remains OpenAI’s primary provider, the AI company is now allowed to engage other vendors like Oracle Corp., though it has committed to spending $250 billion more on Azure.
OpenAI’s transition hasn’t been without challenges, including regulatory reviews and an ongoing lawsuit filed by Elon Musk, who accused the company of straying from its nonprofit mission.
Microsoft’s access to OpenAI’s innovations will not extend to consumer hardware, but OpenAI will have the flexibility to co-develop select products with third-party partners, according to the statement.
