OpenAI has officially concluded its extensive corporate restructuring, a process that has been underway for several months. The San Francisco-based artificial intelligence (AI) giant has successfully established its new for-profit arm, the OpenAI Group Public Benefit Corporation (PBC). This new entity will operate under the guidance of the non-profit OpenAI Foundation, which will retain direct access to the PBC’s capital. Furthermore, the company has forged a new agreement with Microsoft, designed to safeguard their partnership even if OpenAI achieves artificial general intelligence (AGI).
OpenAI’s For-Profit Structure Takes Shape
In a recent announcement, OpenAI confirmed the finalization of its recapitalization. This move streamlines its corporate framework and grants the company access to larger capital, unburdened by the typical restrictions of a non-profit entity. This flexibility is made possible by the creation of the PBC, an initiative OpenAI initially mentioned in May.
With this development, the OpenAI Foundation now holds an equity stake in the for-profit, valued at approximately $130 billion (roughly Rs. 11.5 lakh crore). This increased access to capital will enable the non-profit to allocate $25 billion (roughly Rs. 2.2 lakh crore) to two primary focus areas. The first is health, where the company aims to achieve breakthroughs in better diagnostics, treatments, and cures. The second involves developing robust cybersecurity solutions to protect vital AI infrastructure.
OpenAI reaffirmed its core mission: “ensuring that AGI benefits all of humanity.” The company stressed that this mission will be advanced through both its commercial operations and the Foundation. As OpenAI’s business thrives, the non-profit’s equity stake will increase in value, providing a sustainable source of funding for its philanthropic work.
The New OpenAI-Microsoft Deal
Microsoft’s approval was crucial for OpenAI’s for-profit ambitions. As a key investor with a significant stake, the Windows maker’s consent was necessary for the AI firm’s restructuring. Although the two companies faced disagreements in recent months, they announced a new non-binding agreement in September, paving the way for OpenAI’s PBC plans. Now, both parties have disclosed the specific terms of this new deal.
This agreement signifies the next phase of their relationship, emphasizing future collaboration with increased flexibility and independence for both sides. However, this comes with certain compromises. Microsoft, for instance, has reduced its stake in the for-profit entity, now owning approximately 27 percent of the new OpenAI Group PBC (on an as-converted basis), a decrease from its previous 32.5 percent share.
In exchange, Microsoft will continue as OpenAI’s “frontier model partner,” ensuring priority access to the company’s most advanced models. Azure also remains the exclusive cloud platform for OpenAI’s application programming interfaces (APIs), at least until AGI is formally achieved.
The AGI clause, previously vaguely defined, has now been clarified. Both companies have agreed that any official declaration of AGI by OpenAI must be verified by an independent expert panel. This is a significant step, addressing the long-standing ambiguity surrounding the definition and oversight of AGI.
Microsoft’s intellectual property (IP) rights, which permit its use of OpenAI’s technology, have been extended through 2032, covering even post-AGI models. Conversely, OpenAI gains more autonomy over its internal research, development methods, and experimental systems. Notably, Microsoft’s rights no longer include OpenAI’s consumer hardware offerings.
Perhaps the most transformative aspect of this new deal is Microsoft’s newfound ability to pursue AGI development independently, or in collaboration with new partners. Simultaneously, OpenAI is now free to partner with third parties to develop specific products, though any services delivered via APIs must still operate on Azure.
The agreement also strengthens their financial ties. OpenAI has committed to purchasing $250 billion (22 lakh crore) in Azure cloud services. As a consequence, Microsoft no longer holds the right to be OpenAI’s exclusive compute provider. Both companies have also extended their revenue-sharing arrangement until AGI’s verification.