OpenAI has completed a major reorganization and has also entered into a new definitive partnership agreement with Microsoft.
The goal, starting with OpenAI’s restructuring, is to strengthen the nonprofit’s control over its commercial operations and establish a new organization, named the OpenAI Foundation, as a global philanthropic organization with approximately $130 billion worth of commercial sector equity.
The restructuring, which OpenAI says will “maintain the strongest expression of mission-driven governance in the industry today,” effectively turns the company’s commercial success into a direct funding pipeline for its original mission.
The for-profit organization is now a public benefit corporation called OpenAI Group PBC and is legally bound by its mission. As this PBC grows, the foundation’s commitment will increase by $130 billion, which will be used to fund an initial $25 billion commitment to global health and AI resiliency.
The reorganization was finalized after nearly a year of “constructive dialogue” with the California and Delaware attorneys general’s offices. OpenAI acknowledged that it had “made some changes as a result of those discussions,” stating its belief that they are “better for them” for the company and, by extension, the general public it serves.
Another aspect of this new structure is a redefined partnership with Microsoft. The technology giant’s investment is currently valued at $135 billion, and it will hold a 27% stake in OpenAI Group PBC. This represents a slight dilution from its previous 32.5% stake to reflect the new funding round. The deal maintains Microsoft’s core position as the exclusive Azure API provider for OpenAI’s frontier model, but only until artificial general intelligence (AGI) becomes a reality.
The new terminology introduces new checks on that path. OpenAI’s AGI declaration must be verified by an independent panel of experts. This external check represents a significant update to the governance of the partnership. Microsoft’s intellectual property rights have also been extended to 2032 to include models developed after the AGI declaration and with appropriate safety guardrails.
Microsoft can now pursue AGI independently, either on its own or in collaboration with other partners. This allows Microsoft to take a new path forward apart from its reliance on OpenAI research. If Microsoft developed AGI using OpenAI’s IP before it was officially declared, those models would be subject to significantly larger computational thresholds than systems currently in use.
But new freedoms cut both ways. OpenAI also has new flexibility. The company has committed to purchasing $250 billion in additional Azure services, but Microsoft no longer has the right of first refusal as a computing provider. This gives OpenAI new leverage in infrastructure negotiations.
The company is also now able to release an open-weight model that meets certain criteria and serves U.S. government national security customers on any cloud. This is a new feature worth noting. You also have the ability to co-develop some non-API products with third parties, but API products developed with other companies must remain on Azure. Microsoft’s intellectual property rights also specifically exclude OpenAI’s future consumer hardware.
Existing revenue sharing agreements will remain in place until AGI is verified by a panel of experts, but payments will be made over an extended period of time. Both companies framed the new chapter as a way to continue innovation. OpenAI concluded that this new structure provides both the ability to advance the frontiers of AI and an updated model to “ensure that progress works for everyone.”
See also: OpenAI connects ChatGPT to enterprise data to surface knowledge
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