October 29 (V7N) – Microsoft and OpenAI have announced a landmark agreement allowing the ChatGPT developer to restructure itself as a public benefit corporation (PBC), granting CEO Sam Altman greater control and freeing the $500 billion startup to expand its global artificial intelligence operations.
The deal, revealed on Tuesday, removes long-standing restrictions imposed by a 2019 partnership that gave Microsoft rights over much of OpenAI’s work in exchange for cloud-computing infrastructure. Following the explosive rise of ChatGPT three years ago, that arrangement had become a source of growing tension between the two companies.
Under the new structure, OpenAI will operate as “OpenAI Group PBC,” a hybrid model that maintains nonprofit oversight while functioning more like a traditional company. Microsoft will retain a 27% stake—valued at about $135 billion—after investing $13.8 billion in OpenAI. The company will continue sharing around 20% of its revenue with Microsoft for several years, though the firms expect to end this arrangement once artificial general intelligence (AGI) is formally achieved.
Despite the restructuring, OpenAI said Altman will not receive equity in the new company and will maintain his current annual salary of approximately $76,000. The organization added that there are no immediate plans for a public offering.
The reorganization follows the brief ousting of Altman in late 2023, an episode that exposed limitations within OpenAI’s unusual governance model, which had restricted investor influence. The updated structure gives Altman more autonomy to form partnerships, negotiate deals, and shape the global AI landscape.
Microsoft’s partnership with OpenAI will remain in effect until at least 2032, tied to a long-term cloud computing contract. However, Microsoft will no longer hold first-refusal rights on OpenAI’s future consumer hardware or AI infrastructure deals.
Bret Taylor, chair of the OpenAI Foundation’s board, said in a statement, “OpenAI has completed its recapitalization, simplifying its corporate structure. The nonprofit remains in control of the for-profit arm and now has a direct path to major resources before AGI arrives.”
OpenAI currently serves over 800 million weekly users worldwide, positioning ChatGPT as the most recognizable face of artificial intelligence. The restructuring marks a significant evolution for a company originally founded as a nonprofit focused on AI safety, signaling its transformation into a major commercial force poised to compete with global tech leaders while remaining under nonprofit governance.
Microsoft shares rose 2.1% following the announcement, once again lifting its market capitalization above $4 trillion.
The two companies are expected to remain closely intertwined as the AI race accelerates, with independent oversight ensuring transparency, data integrity, and safety as OpenAI advances toward its ultimate goal—achieving artificial general intelligence.
Comment: