Microsoft and OpenAI are revising their partnership with a new non-binding agreement that could transform OpenAI from a nonprofit into a for-profit entity. This is a significant move as OpenAI seeks new funding and considers going public, according to Reuters.
While both companies are keeping quiet about the money details, they’re hammering out the final terms. The move comes after months of back-and-forth negotiations, with OpenAI seeking to adopt a more traditional business model that will help it attract investors and expand beyond its partnership with Microsoft.
Microsoft has already invested heavily in OpenAI, with $1 billion in 2019 and another $10 billion this year. Microsoft once had exclusive rights to OpenAI’s technology on Azure, but those rights have become less strict. OpenAI is also expanding, launching its $300 billion Stargate data center project and inking new deals with Oracle and Google.
OpenAI now earns billions in revenue, and its nonprofit side could receive more than $100 billion under the new plan. This accounts for approximately 20% of the company’s $500 billion private valuation. The company is still awaiting approval from California and Delaware officials and hopes to complete the process by December to secure its funding. The deal demonstrates Microsoft’s intention to maintain a presence in the market with OpenAI’s groundbreaking technology, even as both companies develop their own competing AI tools.
